As we reach the middle of this critical week, global markets are practically on fire. The main agenda for the markets is U.S. President Donald Trump’s announcement on April 2 regarding "Tariffs"! Trump aims to increase U.S. exports and reduce imports. However, the result of these tariffs could lead to an increase in inflation in the U.S. economy.
When we look at the details of U.S. inflation data, we see that housing costs account for about a third of total inflation. Housing inflation, which had increased from 1.5% after the pandemic to 8% in early 2023, is currently being priced around 4.20%. This means that inflation in the U.S. economy has been on a downward trend over the past two years. Of course, as inflation decreases, the likelihood of interest rate cuts by the Federal Reserve (Fed) is rising. The increasing chances of Fed rate cuts continue to drive demand for precious metals, particularly in the uncertain period under Trump’s policies.
Gold, which started 2025 at $2625, closed Q1 of 2025 with a positive premium at $3125, marking a record high. As the new quarter begins, with Trump’s tariffs bringing risks of inflation, recession, or stagflation in the U.S. economy, the demand for precious metals is expected to continue to rise. Especially with the increase in geopolitical risks, this quarter may continue to see record highs in gold. In the short term, as tariffs are announced, the tariff risk might be priced in, which could lead to some profit-taking in precious metals. However, this could present a buying opportunity for the market. In other words, short-term selling pressure may not change the positive trend for the medium and long term.
On the macroeconomic front in the U.S., the Q4 GDP data released last week came in above expectations, at 2.4%! With no talk of a recession yet in the U.S. economy, the positive growth data provides a clue about the outlook for the upcoming period.
Technically, gold prices above the psychological support level of $3000-$2960 continue to support the positive movement. Trump’s tariff process, the increasing likelihood of Fed rate cuts, and the reemergence of geopolitical risks are the key factors supporting gold prices.
Meanwhile, with the movement in gold prices, the price of gold in Turkey has also reached historical record levels. With the interest rate cuts by the Central Bank of the Republic of Turkey (CBRT), risks have led to a slight upward movement in the exchange rate policy, and gold prices in the Grand Bazaar have set new records, fluctuating between 3840-3800 TRY this week. In Turkey, premiums in terms of gold ounces have risen by about $30, and the difference in kilograms has reached around $1000 compared to the London market.
According to CME Fed Watch, the probability of a 0.25% interest rate cut in June is priced at around 65%.
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