Gold Hits Record High as U.S.-China Trade War Fuels Safe-Haven Demand
Gold rose to a record high, after rising nearly 1% in the previous session, as the opening salvo of the U.S.-China trade war fueled demand for safe-haven assets.
Bullion prices hit an all-time high of $2,848.27 an ounce on Wednesday. That came after President Donald Trump imposed 10% tariffs on Chinese imports the day before, prompting a swift but more targeted retaliation from Beijing. The dollar gauge fell on Tuesday — making gold cheaper for many buyers — with losses accelerating after the U.S. jobs report showed a gradual slowdown in the labor market.
The response from China has been relatively muted compared with Trump’s first term, when Beijing retaliated with nearly equal tariffs on the U.S., but concerns remain about the impact on the world’s two largest economies. The market is also waiting to see if there will be a ripple effect for U.S. monetary policy if the tariffs rekindle inflation. The precious metal would benefit from the uncertain outlook, although it could lose some of its appeal if interest rates remain high.
Spot gold rose 0.2% to $2,847.85 an ounce as of 8:46 a.m. in Singapore. The Bloomberg Dollar Spot Index was flat, after falling 0.7% on Tuesday. Silver fell, palladium was steady and platinum edged up.
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, prompting dealers and traders to rush large amounts of the metal into America before the tariffs take effect. The turmoil has also led to a spike in rental rates for gold and silver — the returns that holders of the metal in London vaults can earn by lending it out for short periods.
Source: Bloomberg
