By Fadi Al Kurdi

Gold prices hovered near record highs as investors assessed the latest developments in global trade. Trade tensions could impact the global economy and dampen investor sentiment. On Wednesday, US President Donald Trump imposed a 25% tariff on all steel and aluminum imports, prompting retaliation from key partners.

Adding to market tensions, Trump promptly announced that the US would retaliate next month with global “reciprocal” tariffs. These global tensions could fuel risk-off sentiment and lead traders to seek protection in safe-haven assets such as gold. If tensions persist, gold could break new record highs.

Meanwhile, US headline and core inflation showed signs of slowing, potentially paving the way for a looser monetary policy from the Federal Reserve. As such, traders now shift their focus to next week’s Fed decision, where a dovish stance should favor non-yielding assets like gold. However, a hawkish tone might benefit US treasury yields, potentially capping gold’s upside potential.

Al Kurdi is founder/CEO FFA Kings