On February 26, 2025, the global gold market experienced notable fluctuations as investors reacted to the recent peak prices, driven by concerns over trade tariffs imposed by President Donald Trump. Gold prices slid to their lowest levels in over a week, indicating investor ambiguity and profit-taking behavior following their highest valuation earlier this week.
Specifically, gold prices fell by 1.4%, settling at $2,909.59 per ounce by the close of trading. Earlier on February 24, gold had reached $2,956 per ounce, marking its highest recorded value. Following the downward trend, April gold futures also saw a decline of 1.5%, reaching $2,919 per ounce. Reports indicate relative market stability throughout the morning of February 26, with spot gold quoted at $2,916 per ounce.
Reflecting on the situation, Bob Haberkorn, senior market strategist at RJO Futures, commented, "You’re seeing profit-taking as well as investors temporarily sitting on the sidelines to look for opportunities to re-establish positions at lower prices." This sentiment underlies the cautious approach many investors are taking amid fluctuational volatility.
Despite the drop, gold remains an attractive refuge during periods of market instability, and this serves as its 11th record high achieved within the year. The tremors through the marketplace were intensified when President Trump reaffirmed plans to implement tariffs on items imported from Canada and Mexico, regardless of the nations' attempts to fortify border security against the impending March 4 deadline.
Peter Grant, vice president and senior metals strategist at Zaner Metals, expressed optimism, noting, “There’s certainly enough concern about tariffs and trade overall, so any drop will be perceived as buying opportunities.” This principle echoed through the market as traders processed the broader implications of these economic maneuvers.
Looking at trading positions, during the week ending February 18, speculative positions had decreased, with traders cutting down 13,605 long contracts to reach 201,962 contracts. Market observers also anticipate the Federal Reserve's (Fed) substantial response to shifting inflation rates and labor market conditions, as highlighted by new research shared at the San Francisco Fed offices.
Federal Reserve forecasts suggest rising inflation could compel the central bank to maintain elevated interest rates, potentially decreasing the allure of gold—a non-yielding asset. Investors are now eagerly awaiting the upcoming Personal Consumption Expenditures (PCE) index report scheduled for release on Friday, which is the Fed's preferred inflation gauge, to glean insights on monetary policy direction and interest rate trajectories moving forward.
Meanwhile, within precious metals trading, silver prices dropped by 2.3% to $31.61 per ounce, platinum fell 0.5% to $962.15, and palladium decreased by 1.9% to $922.39. Both platinum and palladium recorded their lowest values since January, reflecting broader market trends.
Shifting gears, the exchange rate of the USD took center stage on the same day. The central exchange rate, as announced by the State Bank, increased by 22 VND to 24,668 VND/USD, hence permitting trading within the set range of 23,435 - 25,901 VND/USD across commercial banks. Notably, the buying and selling rates at various banks observed significant increases, with amounts rising by 40 to 80 VND.
By 9:15 AM, the buying rates for USD were recorded at approximately 25,320 - 25,370 VND/USD, with selling rates aligning between 25,710 - 25,760 VND/USD. The 'black market' values for USD showed comparable increases, trading around 25,680 - 25,780 VND/USD with minor daily fluctuations.
The USD's position was significantly affected by the latest consumer confidence data, which showcased the most substantial drop since August 2021. The Conference Board reported consumer optimism decreased to 98.3, much lower than the anticipated 102.5 forecasted by economists. These nuances contributed to the weakening of the dollar, with the US Dollar Index (DXY) falling to 106.28.
Investor uncertainty now casts shadows over the U.S. economic growth forecast, bolstered by concerns surrounding escalated tariffs against Canadian and Mexican imports due to be enforced soon. Senior analyst Joseph Trevisani at FXStreet offered insights, stating, "There will be plenty of back-and-forth over Trump’s initiatives, which will likely be unfavorable for the market long-term."
Fed Richmond President Tom Barkin reiterated the need for caution, emphasizing the necessity of waiting to observe potential easing of inflation back to the target rate of 2%. This hesitation was reflected by recent drops in the yield on 10-year U.S. Treasury bonds, easing 8.9 basis points to 4.304%, emphasizing defensive market positions.
Overall, February 26, 2025, painted a complex picture, intertwining gold's fluctuational narrative with the USD's resurgence, all set against the backdrop of looming economic decision-making amid global trade clarifications.