Gold prices surged to new all-time highs on Thursday, driven by growing concerns over the impact of U.S. President Donald Trump’s escalating trade tariffs. The tariffs, which include a 10% baseline duty on all imports and increased tariffs on key trading partners, have intensified global trade tensions and sparked uncertainty in the financial markets.
Spot gold briefly reached a record high of $3,167 before pulling back slightly and settling near the $3,130 mark. Despite the corrective dip, the yellow metal remains on a strong upward trajectory, having gained 19% year-to-date. This reflects a broader trend of rising demand for safe-haven assets amid increasing geopolitical and economic risks.
The recent tariffs have raised concerns that U.S. economic growth could slow down, particularly as trade partners retaliate. This has led to speculation that the Federal Reserve may be forced to cut interest rates in the near future to cushion the economic impact of the trade war. According to Kyle Rodda, an analyst at Capital.com, “One of the key factors pushing gold higher is the potential slowdown in the economy that could raise odds of aggressive rate cuts.” The prospect of lower interest rates makes non-yielding assets like gold more attractive.
Market analysts are also highlighting the potential for further gold price gains as the trade conflict escalates. Mat Simpson, an analyst at City Index, noted that the bullish momentum for gold could continue unless the markets experience a significant shakeout that disrupts both bullish and bearish positions.
As the trade war intensifies, traders are anticipating a shift away from U.S. dollar-denominated assets in favor of gold. With the likelihood of the Federal Reserve easing monetary policy to mitigate the economic impact of tariffs, the U.S. dollar could face additional downward pressure. This would further boost demand for gold, pushing its value higher.
The broader market outlook suggests that gold will continue to benefit from both the uncertainty surrounding global trade and the potential for U.S. monetary policy shifts. Investors are increasingly turning to gold as a hedge against the growing risks of trade wars, weaker economic growth, and a declining dollar.