Gold Steady Near Record High as Trump Initiates US-China Trade War
Gold is holding steady near a record high after President Donald Trump imposed 10% tariffs on China, boosting demand for the safe-haven asset.
Beijing quickly retaliated with levies on US products, and also announced an investigation into Google for alleged antitrust violations. The trade war with China came after Trump threatened to impose 25% tariffs on Canada and Mexico, before announcing he would suspend them for a month. Bullion is trading relatively close to an all-time peak above $2,830 an ounce hit on Monday.
There is a lot of anxiety about what will happen, which increases gold’s appeal as a store of value in an unpredictable environment. How far the dollar rises will be important, as a stronger US currency makes bullion more expensive for many buyers.
Among the biggest questions are how resilient the US and Chinese economies are to the trade war, and the ripple effects for monetary policy if tariffs reignite inflation. The Federal Reserve paused interest rate cuts last month, taking a “wait and see” approach to the new administration’s policies.
Spot gold was steady at $2,814.42 an ounce at 2:09 p.m. in Singapore. The Bloomberg Dollar Spot Index was little changed after rising 1.1 percent over the previous six sessions. Silver fell, platinum was flat and palladium rose.
Trade war fears had been roiling precious metals markets even before Trump went ahead with tariffs on China. U.S. gold and silver prices have surged above international benchmarks in recent weeks, sending traders and dealers rushing to bring large amounts of the metal into the U.S. before any tariffs are imposed. The turmoil has also led to a surge in gold and silver rental rates — the profits that holders of bullion in London vaults can make by lending out the metal on a short-term basis.
Source: Bloomberg
