【Weekly wealth trends】Gold prices hit a record high, Powell in the spotlight this week

Hello, Tigers!

On Monday night, U.S. stock index futures declined, while the dollar and gold rose, signaling that investors were pulling away from risk after President Donald Trump announced a 25% tariff on all U.S. imports of steel and aluminum. The demand for safe-haven assets briefly pushed gold prices above $2,921 for the first time on Tuesday. Meanwhile, Fed Chair Jerome Powell’s speech at this week’s Federal Reserve meeting has become a key focus for global investors.

Currently, global market sentiment is highly sensitive, and many investors are feeling uncertain—concerned about the impact of tariffs but also hesitant to miss out on the ongoing tech boom.

So, how should investment strategies be adjusted this week? Let's first analyze the key events:

1.Trump Plans to Impose a 25% Tariff on Steel and Aluminum Imports

Over the weekend, Trump officially launched the second phase of his tariff policy, planning to impose a 25% tariff on all imported steel and aluminum starting today. This move is a crucial step in the major trade reform he promised during his campaign.

Additionally, he hinted at implementing “reciprocal tariffs” on Tuesday or Wednesday—meaning, if other countries impose tariffs on U.S. goods, the U.S. will do the same in return. According to Trump, this policy will take effect immediately.

Which industries will be affected? The automotive, aerospace, and defense industries—heavily reliant on steel and aluminum—will be the first to bear the brunt. Companies like Tesla, Ford, and General Motors may face rising production costs, squeezing profit margins. However, the full impact of this policy depends on how other countries respond.

For example, Canada might cut oil exports to hurt U.S. refineries, while Mexico, which relies on U.S. imports for machinery, could seek alternative suppliers. On the other hand, the U.S. domestic steel and aluminum industries are clear winners, and some local construction companies may also benefit as competitors face rising costs.

Overall, with tariff policies still evolving, market risks remain. Stocks continue to react sensitively—positive news drives the market higher, while negative developments trigger declines. For investors, market volatility remains a key risk.

2.Powell’s Testimony at the Federal Reserve Meeting

This week, Fed Chair Jerome Powell faces a major test. On February 11 (Tuesday) and February 12 (Wednesday), he will testify before the Senate and House on the Fed’s semi-annual monetary policy report.

This testimony could provide more clues about future interest rate decisions. After reading his prepared remarks, Powell will answer lawmakers' questions, with markets closely watching his views on economic growth, inflation, and rate policy. Analysts expect Powell to emphasize that economic resilience gives the Fed no urgency to cut rates. Given the current economic strength, Fed officials also have time to assess the impact of Trump’s trade, immigration, and tax policies.

In his January press conference, Powell made it clear that the Fed is in no hurry to lower rates. The Fed’s semi-annual report reaffirmed that future monetary policy decisions will be data-driven, with a firm commitment to a 2% inflation target.

Beyond Powell’s comments, this week’s U.S. Consumer Price Index (CPI) data will also influence market expectations for interest rates.

On February 12 (Wednesday) at 9:30 AM ET, the Bureau of Labor Statistics will release January’s CPI and core CPI data. The Cleveland Fed’s Nowcasting model predicts headline CPI at 2.85% YoY and core CPI at 3.13% YoY—both slightly lower than the previous month. The persistence of U.S. inflation is strengthening market expectations that interest rates will stay unchanged in the near term. Currently, money markets expect the Fed to cut rates in June or July, though a second rate cut this year is not yet fully priced in.

Additionally, U.S. Producer Price Index (PPI) data on February 13 (Thursday) and retail sales data on February 14 (Friday) will also be closely watched. Rising producer prices or strong consumer spending could further dampen expectations for Fed rate cuts.

3.Investment Strategy for This Week

Safe-Haven Assets:

According to Louise Street, a senior market analyst at the World Gold Council, central banks’ gold purchases will remain dominant in 2025, with ETF demand also playing a crucial role. However, high gold prices and slowing economic growth may weaken jewelry demand. Geopolitical and macroeconomic uncertainties will define 2025, reinforcing gold’s role as a store of value and a safe-haven asset.

Goldman Sachs predicts that continued central bank gold buying and increased ETF holdings post-Fed rate cuts will support gold prices, forecasting a rise to $3,000 per ounce by Q2 2025. Persistent U.S. policy uncertainty could further fuel demand for gold as a hedge.

Short-term gold prices have surged beyond the expected range, making it risky to chase new highs. However, since tariff risks have not been fully priced in, further gold price increases remain a possibility.

Technology Sector:

After facing headwinds due to Deepseek’s emergence, U.S. hardware stocks took a hit over the past two weeks. However, NVIDIA (NVDA) has rebounded for six consecutive days since February 3, signaling strong investor interest in bargain-hunting.

Among the "Magnificent Seven" tech giants, NVIDIA is the only one yet to report earnings, leaving some uncertainty. Historically, stocks often experience pre-earnings hype followed by a "sell-the-news" reaction.

With the Fed meeting and Trump’s tariff threats looming, risk assets remain under pressure. Given the uncertainty, short-term market swings are unpredictable, and long-term investment perspectives are more advisable for tech stocks.

Asset Allocation Recommendations:

That wraps up this week’s key trading insights! What’s your take? Drop a comment below! 🚀