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Gold Rises as Growth Fears Trump Inflation Concerns
2 Apr
Summary
- Gold's safe-haven status revives when growth risk overshadows inflation.
- The Federal Reserve may have limited capacity for further interest rate hikes.
- US President's upcoming speech on Middle East conflict could influence markets.
Gold's traditional role as a safe-haven asset is re-emerging as economic growth risks take precedence over inflation concerns. Yuxuan Tang, Asia head of rates and FX strategy at JPMorgan Private Bank, expressed strong conviction that the Federal Reserve faces constraints in raising interest rates further in the current cycle. The central bank is expected to prioritize addressing the strained labor market.
This environment, characterized by potentially lower interest rates, is favorable for gold, an asset that does not offer interest payments. Meanwhile, global markets are closely watching for cues from US President Donald Trump's upcoming speech concerning the Middle East conflict, which has been ongoing for five weeks. The speech is anticipated to highlight the success of US military operations.
