Gold Hits New All-Time High Amid Trade Tensions and Policy Uncertainty
Gold soared to an unprecedented peak, surpassing its previous record set in October. The surge came as the US dollar weakened and investors sought safe haven assets amid concerns over President Donald Trump's tariff measures.
The precious metal rose as much as 1.4% to $2,798.59 per ounce. A weaker dollar makes gold more attractive to investors holding other currencies, since it is priced in the US dollar.
The decline in the greenback followed a widely anticipated rate cut by the European Central Bank and data showing a slowdown in US economic growth.
Gold's recent gains have been driven by heightened risk aversion due to Trump's trade threats. "The uncertainty surrounding Trump's policies and tariffs could impact US growth," said Phil Streible, chief market strategist at Blue Line Futures. "In an environment of rising inflation and slowing growth, gold tends to perform well."
Trump's policies are seen by many economists as potentially inflationary and harmful to economic expansion. Federal Reserve Chair Jerome Powell acknowledged the potential impact of Trump's agenda, but the Fed left interest rates unchanged at its January meeting.
Despite the lack of clarity on Trump's plans, he has set a deadline of Saturday for tariffs on Mexico and Canada. Concerns over the impact of tariffs have already sent gold and silver prices higher in the US, with traders rushing to move metals into the country.
Ongoing worries about rising US debt and central bank diversification efforts are further supporting gold's rally. Spot gold closed at $2,791.79 per ounce in New York as of 12:25 p.m. ET.