Precious metals staged a powerful rally to close the trading week, with gold vaulting back above the psychologically significant $5,000 per ounce level. The surge was driven by a combination of fresh geopolitical policy announcements and underlying economic data that reinforced concerns about persistent inflation and slowing growth.
Price Action and Market Drivers
Spot gold prices climbed 1.5% to settle at $5,071.48 per ounce by late Friday trading. The more actively traded U.S. April gold futures contract closed at $5,080.90, a gain of 1.7%. The rally was even more pronounced in silver, which soared 5.8% to finish at $82.92 per ounce. The moves marked a sharp reversal from Thursday's subdued session, where gold had hovered near $4,979.
The catalyst for the late-week surge was twofold. First, markets digested the latest U.S. inflation data, which showed the core Personal Consumption Expenditures (PCE) price index—the Federal Reserve's preferred inflation gauge—rose 0.4% in December, exceeding the 0.3% forecast. The annual rate held at an elevated 2.9%, keeping pressure on central bank policymakers.
Policy Shock and Economic Crosscurrents
Adding significant volatility was a weekend announcement from former President Donald Trump, who vowed to impose new temporary tariffs of 15% on nearly all U.S. imports, up from a previous 10% plan. This followed a Supreme Court rejection of an earlier tariff scheme. According to reports, the plan would utilize Section 122 authority, capping the tariffs at 15% and limiting their duration to 150 days unless extended by Congress.
"He will try to re-establish tariffs using other statutes, which will promote volatility," noted independent metals trader Tai Wong, highlighting the market's sensitivity to trade policy headlines.
The economic backdrop provided a confusing signal. Data released Friday showed U.S. economic growth slowed to an annualized rate of 1.4% in the fourth quarter, a significant miss compared to the 3.0% estimate. Analysts pointed to the 43-day government shutdown as a key factor denting consumer spending. "The core of the economy is resilient," said Michael Pearce, chief U.S. economist at Oxford Economics, while cautioning that high inflation likely keeps the Fed on hold.
Market Mechanics and Trader Sentiment
Trading was volatile throughout the session. The April gold futures contract swung between a low near $4,999 and a high around $5,131 before settling. Volume was reported at approximately 128,000 contracts. Analysts described the price action as erratic. RJO Futures strategist Daniel Pavilonis characterized gold as "whipsawed," noting that while geopolitical tensions provided some support, downside risks remained. He suggested the metal could face "one more leg down" from factors beyond the immediate headlines.
Detailed inflation analysis from Barclays economist Pooja Sriram highlighted a surprising 12% monthly spike in legal-services prices for January, a category she described as volatile enough to "alone" sway the overall monthly inflation figure.
Looking Ahead: Data and Trading Schedule
The market now faces a period of closure before the next catalyst. While COMEX gold futures on CME Group trade from Sunday to Friday, they pause for a daily one-hour break, leaving prices frozen over the weekend. This means any new headline risk will accumulate until trading resumes Sunday evening.
Investors are looking ahead to key data releases for further direction. The U.S. Producer Price Index (PPI) for January is scheduled for release on February 27 at 8:30 a.m. Eastern Time. The next major inflation update, the Personal Income and Outlays report featuring the PCE readings, is not due until March 13 from the Commerce Department's Bureau of Economic Analysis.
Market expectations currently reflect anticipation for two quarter-point interest rate cuts from the Federal Reserve this year, with the first potentially arriving in June. However, the sticky inflation data and new tariff-induced uncertainty complicate that outlook, setting the stage for continued volatility in the weeks ahead.
