Gold Rises as Traders Brace for Tariffs That Could Spark Trade War
Gold rose as traders braced for the U.S. to raise tariffs on Chinese goods to as high as 104%, a move Beijing is widely expected to respond to as hopes fade that a brutal global trade war can be averted.
Gold rose as much as 0.94% on Wednesday, after falling for four sessions. President Donald Trump has signaled that the U.S. is open to a deal that could reduce or eliminate higher tariffs on dozens of countries as Asian and European leaders announced plans to hold talks with the White House.
However, he pressed ahead with higher tariffs on about 60 trading partners, including China, which he called the “worst offender” that would take effect after midnight New York time. Bullion prices eased after hitting an all-time high of $3,167.84 an ounce last week, boosted by a surge in buying from investors seeking safety amid concerns that a global trade war could trigger an economic downturn.
While gold is a traditional safe haven, extreme market disruptions can prompt investors to sell the asset to cover losses elsewhere. The precious metal still looks to have more upside, having risen more than 13% this year on central bank buying and inflows into exchange-traded funds.
Markets are also betting that rising volatility could prompt the Federal Reserve to accelerate interest rate cuts to stave off a recession. Lower interest rates typically benefit gold, which does not pay interest. Gold for immediate delivery rose 0.8% to about $3,007 an ounce as of 10:16 a.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.4%. Silver, palladium and platinum all edged up.
Source: Bloomberg
