Gold Rises Near Record High as Trade War Anxiety Reigns
Gold edged higher to trade just below a record high set at the opening of the week, as U.S. plans to impose more tariffs further stoked investor anxiety.
Bullion prices rose to around $3,224 an ounce, less than $30 below Monday’s peak. The Trump administration has opened investigations into imports of semiconductors and pharmaceuticals, paving the way for the levies.
The precious metal has gained more than a fifth this year as the worsening trade war has dampened global growth prospects, eroded confidence in traditionally safe U.S. assets including Treasury bonds and roiled financial markets. Treasury Secretary Scott Bessent played down the recent selloff in the bond market, while noting that his department has the tools to address the dislocation if needed.
Federal Reserve Chairman Christopher Walker, meanwhile, said the inflationary impact of the trade war would be temporary, with interest rate cuts “very likely” in the second half. Lower borrowing costs typically help gold, which pays no interest.
Leading banks remain bullish on bullion’s prospects over the coming quarters as investors add to holdings in gold-backed exchange-traded funds and central banks continue to accumulate the metal. Goldman Sachs Group Inc. has forecast that prices will rise to $4,000 an ounce by mid-2026.
Gold could also draw support from strong demand in China, the world’s largest bullion market. As the trade war has escalated, there has been a surge in speculative trading, as well as inflows into local ETFs. “The devaluation of the yuan, macroeconomic volatility and rising dedollarization rhetoric are classic and powerful drivers of gold demand” in China, said Justin Lin, a Sydney-based analyst at Global X ETFs.
Globally, “further rallying would likely require a shift in dovishness from the Federal Reserve, or clearer signs of a material slowdown in the U.S. economy,” he said. Gold rose 0.4% to $3,222.92 an ounce at 10:35 a.m. in Singapore. The Bloomberg Dollar Spot Index edged up after a five-day decline that pushed the gauge to its lowest since October. Silver and palladium fell, while platinum rose.
Source: Bloomberg
