On March 11, 2025, gold prices experienced a notable increase, driven by safe-haven demand as investors reacted to escalating trade tensions and anticipated U.S. inflation data.
Gold Price Movements
Spot gold climbed 0.7% to $2,908.94 per ounce as of 0844 GMT, recovering from a recent low. U.S. gold futures rose 0.5% to $2,913.70. The dollar index hit a four-month low, making gold more affordable for international buyers, while the benchmark 10-year U.S. Treasury yield also declined.
Factors Influencing Gold Prices
Several factors contributed to the rise in gold prices:
- Trade Tensions: The Trump administration’s implementation of tariffs on imports from Mexico, Canada, and China has heightened concerns about a potential trade war, leading investors to seek the safety of gold.
- Inflation Expectations: Upcoming U.S. Consumer Price Index (CPI) data is anticipated to show a slight deceleration in inflation to 2.9% for February, down from 3% in January. Despite this decrease, inflation remains above the Federal Reserve’s 2% target, influencing gold’s appeal as a hedge against inflation.
- Central Bank Demand: Ongoing robust purchases by emerging market central banks, particularly in the London over-the-counter market, continue to fuel the gold rally that began in 2022. These purchases are expected to remain structurally elevated, supporting gold prices.
Market Outlook
Investors are closely monitoring the upcoming U.S. inflation report, as it will provide insights into the Federal Reserve’s potential policy actions. The possibility of stagflation—a combination of stagnant economic growth and elevated inflation—remains a concern, especially with the current trade policies adding uncertainty to the economic landscape.
