94Ha Viewpoint
In early Asian trading on Thursday (March 13), spot gold fluctuated narrowly at a near two-week high and is currently trading around $2,936.14 per ounce. As U.S. consumer price growth slowed in February, the Federal Reserve is expected to resume interest rate cuts in June, and Europe took retaliatory actions after Trump began to impose metal tariffs. Safe-haven demand once again provided upward momentum for gold prices, helping gold prices rise by nearly $20 on Wednesday, reaching an intraday high of $2,940.34 per ounce, slightly lower than the historical high of $2,956.01, and closed at $2,933.18 per ounce.
The momentum of consumer price increases in the United States slowed in February as rising housing costs were partially offset by falling air fares, providing room for the Federal Reserve to keep interest rates unchanged next week and wait and see the economic impact of the trade war.
Data showed that the U.S. consumer price index rose 0.2% last month after accelerating 0.5% in January, the smallest increase since October.
The CPI rose 2.8% year-on-year in February and 3.0% in January. Economists had expected the CPI to rise 0.3% month-on-month and 2.9% year-on-year.
Excluding volatile food and energy, the U.S. core CPI rose 0.2% in February after rising 0.4% month-on-month in January.
The core CPI rose 3.1% year-on-year in February, the smallest increase since April 2021, and rose 3.3% in January. The annualized increase in the core CPI in the three months ending February was 3.6%.
However, the improvement may be only temporary against the backdrop of aggressive import tariffs, and the cost of most goods is expected to increase in the coming months.
“People are still worried that we will be subject to tariffs, and this will eventually likely trigger some inflation,” said Bart Melek, head of commodity strategy at TD Securities.
Melek added that the decline in U.S. inflation could give the Federal Reserve more room to cut interest rates.
Last year, the Fed cut interest rates by 100 basis points. Financial markets expect the Fed to resume cutting interest rates in June after pausing them in January due to a deteriorating economic outlook.
According to CME’s “Fed Watch”: The probability of the Fed keeping interest rates unchanged in March is 98.0%, and the probability of a 25 basis point rate cut is 2.0%. The probability of keeping the current interest rate unchanged by May is 82.1%, the probability of a cumulative 25 basis point rate cut is 17.6%, and the probability of a cumulative 50 basis point rate cut is 0.3%.
The probability of keeping the current interest rate unchanged by June is 16.9%, the probability of a cumulative 25 basis point rate cut is 68.8%, the probability of a cumulative 50 basis point rate cut is 14%, and the probability of a cumulative 75 basis point rate cut is 0.3%.
Economists also expect that the February personal consumption expenditure (PCE) price index, one of the key inflation indicators tracked by the Fed, will not be as mild as the CPI data, but much depends on the February producer price (PPI) data scheduled for release on Thursday.
“The trade war is expected to push prices higher in future inflation reports. The Fed is currently on the sidelines due to price uncertainty,” said Chris Low, chief economist at FHN Financial.
Goldman Sachs currently estimates that core inflation will rise to around 3% in December. Previously, the firm had forecast core PCE inflation to remain around 2% for the rest of 2025.
U.S. producer price index (PPI) and unemployment claims data for the week are the next set of data investors will watch on Thursday.
On the trade policy front, U.S. President Donald Trump’s tariffs on all U.S. imports of steel and aluminum products took effect on Wednesday, furthering the move to re-align global trade in favor of the United States and quickly sparking retaliation from Europe.
U.S. President Donald Trump threatened on Wednesday to escalate the global trade war by imposing further tariffs on European Union goods after major U.S. trading partners said they would retaliate against trade barriers already put in place by the U.S. president.
Just hours after Trump’s 25% tariffs on all U.S. steel and aluminum imports took effect, Trump said he would impose additional penalties if the European Union follows through on its plan to impose retaliatory tariffs on some U.S. goods next month. “Whatever they charge us, we’re going to take back,” Trump told reporters at the White House.
Trump’s obsession with tariffs has hurt investor, consumer and business confidence and raised fears of a recession. He has also repeatedly threatened to annex neighboring Canada, damaging relations with a close ally and major trading partner.
Canada, the largest supplier of steel and aluminum to the United States, announced retaliatory tariffs of 25% on those metals as well as computers, sports equipment and other products worth a total of $20 billion.
Canada has already imposed tariffs on similar amounts of U.S. goods in response to Trump’s broader tariffs.
“We will not stand idly by while our iconic steel and aluminum industries are unfairly targeted,” said Canadian Finance Minister LeBlanc.
The Bank of Canada also cut interest rates to prepare the country’s economy for disruptions.
Trump’s move to increase protection for U.S. steel and aluminum producers restores an effective 25% tariff on all metal imports and expands tariffs to hundreds of downstream products, from nuts and bolts to bulldozer shovels and soda cans.
U.S. Commerce Secretary Lutnick said Trump would also impose trade protection measures on copper.
In terms of the situation in Russia and Ukraine, the Kremlin said on Wednesday that it was waiting for details from Washington on a 30-day ceasefire proposal in the Ukrainian conflict before responding, while U.S. Secretary of State Marco Rubio hoped to reach a ceasefire agreement within a few days.
According to Russian media reports, as Moscow considered the ceasefire plan, Russian President Vladimir Putin visited the Kursk region, his first visit to the region since Ukrainian troops occupied parts of Kursk last year.
Kiev’s army is about to lose this foothold in Russia, which Ukraine hopes to use as a bargaining chip in peace talks with Moscow.
The United States agreed on Tuesday to resume arms supplies and intelligence sharing to Ukraine after Kiev said it was ready to support a U.S. ceasefire proposal in Saudi talks.
The Kremlin said it was carefully studying the outcome of the meeting and awaiting details from Rubio and White House national security adviser Waltz. Late Tuesday, the White House said Waltz had spoken with his Russian counterpart.
The senior Moscow source added that an agreement must take into account Russia’s progress and address its concerns.
