Gold rallies on uncertainty over tariff policy and slowdown in US inflation

Gold prices rose on Thursday as continued uncertainty over tariffs boosted demand for safe-haven assets. The precious metal was also supported by lower-than-expected US inflation data, which bolstered expectations for interest rate cuts in the country.

In the latest release, the US Consumer Price Index (CPI) posted a 2.8% year-over-year increase in February. This was slightly lower than the predicted 2.9% and January's 3.0% reading. However, the slowdown is likely to be temporary due to new import tariffs.

Moderating inflation makes it easier for the Federal Reserve to cut interest rates. This bodes well for gold, which pays no interest. With such a strong backdrop, the yellow metal climbed above $2,940 per ounce on Thursday.

Earlier this month, Donald Trump escalated the trade conflict with his decision. His tariffs could make most goods more expensive in the coming months and amplify economic uncertainty.

Investors are now focusing on the US Producer Price Index (PPI) data, which can provide valuable insights on the Federal Reserve's future stance, Reuters notes.