Gold Surges to Record High on China Retaliation, Escalating Trade War Fears
Gold futures surged to a historic high, surpassing the previous all-time high set on Monday, driven by heightened uncertainty in the wake of US President Donald Trump's 10% tariffs on China and Beijing's swift retaliation.
As China announced countermeasures, including targeting American companies and imposing levies on US goods, gold gained as much as 1% to $2,844.35 an ounce. The weakening of the US dollar, triggered by China's response, enhanced the precious metal's appeal for investors holding various currencies.
The trade war has sparked concerns about the economic implications for both countries and the potential impact on monetary policy. The Federal Reserve's recent decision to pause interest rate cuts has emphasized a cautious approach in light of developments in the Trump administration.
Spot gold experienced a 0.8% increase to $2,837.54 an ounce at 10:39 a.m. ET in New York. The Bloomberg Dollar Spot Index fell by 0.7% after a 1.1% gain in the preceding six trading sessions. Other precious metals, including silver and platinum, also advanced, while palladium declined.
Preceding Trump's implementation of tariffs, trade war tensions had already unsettled precious metals markets. Gold and silver prices in the US have surpassed international benchmarks, prompting a surge in metal shipments into the country ahead of potential levies. Additionally, lease rates for gold and silver have spiked due to increased demand for short-term metal loans.