Gold Reaches Record High Amid Trade War, Safe-Haven Demand
New York, USA - Gold surged to an all-time high, extending its 1% gain from the previous session as the escalating US-China trade war ignited safe-haven demand.
On Wednesday, bullion hit a peak above $2,861 per ounce after President Donald Trump imposed a 10% tariff on Chinese imports. Beijing retaliated with targeted tariffs, but its response was more restrained compared to the first term.
Markets remain apprehensive about the impact on the two largest economies, with concerns that tariffs could exacerbate inflation. Additionally, President Trump's proposal to assume responsibility for the Gaza Strip adds further uncertainty to the outlook.
Gold's appeal as a safe haven is expected to persist amid rising jitters, although rising interest rates could dampen its allure. A gauge of the dollar fell, weighed down by a US jobs report indicating a gradual labor market slowdown. A weaker dollar makes gold more affordable for buyers.
"Safe-havens are sought after in such scenarios," said Charu Chanana of Saxo Capital Markets. "Stalled US-China talks and geopolitical tensions over Gaza will further boost gold prices, regardless of the dollar's trajectory."
As of 6:29 a.m. London time, spot gold gained 0.7% to $2,861.22 per ounce. The Bloomberg Dollar Spot Index lost 0.1%, extending a 0.7% decline from Tuesday. Silver and platinum advanced, while palladium retreated.
Trade-war fears had already sparked volatility in precious metals markets before the imposition of tariffs. US gold and silver prices have risen above international benchmarks, prompting large-scale imports to the US to avoid potential tariffs. The turmoil has also driven up leasing rates for gold and silver in London's vaults.