In the previous session, gold surged more than 1.3%, supported by a combination of slowing U.S. economic growth and a core Personal Consumption Expenditures (PCE) price index reading that climbed back above the 3% threshold. As the Federal Reserve’s preferred inflation gauge, the rise in core PCE reignited concerns about stagflation, driving a renewed surge in safe-haven demand.

The latest data showed that U.S. real GDP growth for the fourth quarter of 2025 slowed sharply to an annualized rate of 1.4%, well below the previous reading of 4.4% and significantly under market expectations. The slowdown was largely attributed to a forty-three-day U.S. government shutdown, which led to a sharp reduction in government spending, while exports and consumption also moderated. Although investment accelerated, overall growth momentum clearly weakened.

In stark contrast to slowing growth, inflationary pressures remain persistent. Core PCE rose 3.0% year on year in December, ticking up from the previous month and remaining well above the Federal Reserve’s long-term target of 2%. The headline PCE annual rate also climbed to 2.9%. This combination of data strengthened expectations that the Fed will maintain a restrictive policy stance, dimming the near-term outlook for rate cuts.

Meanwhile, the University of Michigan consumer sentiment index edged lower to 56.6, with respondents widely reporting that rising prices are eroding their financial well-being. However, the report offered a modest positive note: one-year inflation expectations declined from 4.0% to 3.4%, while five-year expectations remained stable at 3.3%.

On the legal front, the U.S. Supreme Court ruled on February 20 that the Trump administration’s broad tariff measures under the International Emergency Economic Powers Act exceeded presidential authority and were therefore invalid. Markets interpreted the ruling as a significant limitation on executive power.

President Trump quickly expressed disappointment but emphasized that tariffs based on national security provisions (Sections 232 and 301) would remain in place. He also announced an additional global tariff of 10% under Section 122, layered on top of existing rates. This move renewed concerns about escalating trade protectionism and further boosted safe-haven demand for gold.

Geopolitical tensions in the Middle East continue to draw attention. Reports suggest that the U.S. government is weighing options regarding Iran, including limited strikes or broader regime-change measures, though diplomatic channels remain the preferred approach for now.

Market Interpretation:

On the four-hour chart, gold continues to trend higher, with MACD lines and histogram expanding further. In the short term, gold is benefiting from slowing U.S. growth, stronger-than-expected inflation, and safe-haven flows driven by Middle East tensions. However, uncertainty surrounding the Federal Reserve’s policy path may still pose potential pressure on prices. Markets are closely monitoring how these factors evolve to determine gold’s next directional move.