On Friday (February 14th) during the Asian session, spot gold continued its upward trend, reaching a high of $2932.24 per ounce as of 8:00, approaching the historical high of $2942.53 per ounce set on Tuesday. Gold prices rose 0.83% on Thursday, closing at $2928.26 per ounce, as US President Trump announced plans to impose equivalent tariffs on US imports, exacerbating global trade concerns. In addition, US inflation data shows that core PCE will decline, with the US dollar index plummeting by 0.89%, reaching its lowest closing price in nearly two months. US bond yields have also fallen nearly 2% from their high in the past three weeks, providing upward momentum for gold prices.

On Thursday, Trump unveiled a roadmap for imposing equivalent tariffs on every country that imposes tariffs on American imports. This is a new round of offensive against America's friends and enemies, intensifying the possibility of a global trade war.

In terms of trade, for the sake of fairness, I have decided to impose equivalent tariffs, which means that no matter how much tariffs other countries impose on the United States, we will also impose the same tariffs on them. Not more, not less, "Trump told reporters in the Oval Office, while discussing the White House's policy of strengthening economic and national security measures.

Trump signed a memorandum ordering his team to start calculating equivalent tariffs to match tariffs imposed by other countries and resist non-tariff barriers.

Trump emphasized that this policy is for fair trade and to ensure that the United States is no longer subjected to unfair tariff treatment.

He said that Trump's tariffs will be matched with higher tariffs imposed by other countries and aimed at resisting non-tariff trade barriers such as cumbersome regulations, value-added tax, government subsidies, and exchange rate policies, all of which will set barriers for American products to enter foreign markets.

This broad statement seems to be at least partially aimed at triggering negotiations with other countries. White House officials say that if other countries lower tariffs, Trump would be happy to do so.

The official said, 'Therefore, if countries want to lower tariffs, the President is very willing to do so. But we also need to recognize that in many, if not most, cases, tariffs, higher tariffs, are not the main issue.'.

However, the market is also concerned that tariffs may exacerbate inflation and prevent the Federal Reserve from further cutting interest rates. The steady growth of producer prices in the United States in January further proves the rise in inflation and strengthens financial market expectations that the Federal Reserve will not cut interest rates until the second half of the year.

Jeffrey Christian, Managing Partner of CPM Group, said, "The main factors are political uncertainty and economic consequences... PPI is basically neutral, and its impact on gold is actually not significant. Global investors are concerned about what impact Trump's policies will have on the overall economy

Federal Reserve Chairman Powell reiterated at his second congressional hearing this week that he is not in a hurry to cut interest rates.

However, the US dollar index fell 0.89% on Thursday, closing at 107.05, the lowest closing price since December 17, making gold priced in US dollars no longer expensive for foreign buyers, as some parts of the January producer price report pointed to lower inflation levels, and the US dollar further fell after the White House said it would not immediately impose equivalent tariffs on other countries.

The producer price data on Thursday showed that the core personal consumption expenditure (PCE) data - a measure of the Fed's preference - may be lower than previously expected for January when it is released later this month. Although the increase in producer prices exceeded economists' expectations.

Noel Dixon, Global Macro Strategist at State Street Global Markets, said: 'Some of the sub data indicate that PCE may not be as hot as CPI suggests.'. "

Prior to the release of the producer price report, the January consumer price index released on Wednesday was much higher than expected, leading traders to anticipate a decrease in the number of interest rate cuts this year.

At present, futures traders are pricing a rate cut of about 33 basis points before the end of December, higher than the 29 basis points before Thursday's data release, but lower than the 37 basis points before Wednesday's consumer price index data release.

The personal consumption expenditure price index will be released on February 28th. After the data was released on Thursday, economists at Morgan Stanley lowered their forecast for the core PCE increase in January from 0.4% to 0.3%.

The yield of US treasury bond bonds fell sharply on Thursday. Some parts of the producer price index (PPI) in January pointed to the low inflation rate of PCE, suggesting that the Federal Reserve will still cut interest rates later this year.

The focus of this week is inflation, with both the Consumer Price Index (CPI) and Producer Price Index (PPI) higher than expected, but the situation is not as bad as people imagine.

The January PPI in the United States increased by 0.4% month on month, while the December PPI was raised to 0.5% month on month, but some key items used to calculate the core personal consumption expenditure (PCE) price index are actually stable or declining. PCE is a key inflation indicator favored by the Federal Reserve.

The healthcare price decreased by 0.06%, while the weight of this project in the core PCE was close to 20%, and another important project in the core PCE - portfolio management price - increased slightly by 0.4%.

PPI projects indicate that PCE will have a good performance later this month, which is why the bond market has this rebound. Raymond James, Director of Fixed Income Capital Markets Vinny Bleau said.

According to LSEG's calculations, it is expected that the next interest rate cut will take place at the meeting in October or December.

Chris Diaz, co head of fixed income at Brown Advisory, said he believes the Fed's rate cuts will exceed market expectations. The housing sector and wages will have sufficient downward pressure, which will continue to bring downward pressure to inflation

The yield on 10-year US Treasury bonds fell 10.1 basis points to 4.533% on Thursday and hit a three week high on Wednesday. On Thursday, the decline was 1.99%, marking the second largest daily drop since mid January. The yield of US 30-year treasury bond bonds also fell 9.4 basis points to 4.741%, the biggest one-day decline in more than a week.

Investors will also pay attention to news related to the peace talks between Russia and Ukraine.

On Wednesday, Trump discussed the issue of the Ukrainian war in phone conversations with Russian President Putin and Ukrainian President Zelensky, marking the first diplomatic step taken by the newly elected US president towards his promise to end the war.

Trump and Putin had a phone call for over an hour on Wednesday, marking the first known direct contact between the US and Russian presidents since Putin sent troops into Ukraine in February 2022, shortly before speaking with Biden.

The leaders of the United States and Russia announced on Wednesday that they plan to hold face-to-face talks. Previously, the Defense Secretary appointed by Trump bluntly told allies that Washington does not support Ukraine's accession to NATO and believes that Ukraine's return to its pre war borders is a fantasy. One fifth of Ukraine's territory is currently controlled by Russia.

Russia stated on Thursday that Ukraine will "of course" participate in negotiations to end the war, but will establish a separate track for US Russian negotiations.

Kremlin spokesman Peskov also stated that arranging a meeting between Putin and Trump could take several months and could take place in the Saudi capital Riyadh. In Thursday's call, both sides emphasized their political will to seek a solution through dialogue, "Peskov said." We both agree that it is possible to end the war through peaceful negotiations

When asked about Europe's request to participate in the peace talks in Ukraine, Peskov said, "There is currently no clear plan for a possible negotiation process regarding Europe's involvement, so it is too early to discuss this issue now.

Ukraine and its European allies demanded to participate in all peace talks aimed at ending the Russia Ukraine war on Thursday. European officials took a tough stance on Trump's peace talks proposal, emphasizing that any agreement requires the participation of Ukraine and Europe.

On this trading day, the US January retail sales monthly rate (commonly known as the "terror data") and the US January industrial output monthly rate will also be released, which investors need to pay attention to. In addition, investors need to continue to follow Trump's related dynamic news.

Daily chart of spot gold