Trump's proposed tariff plans. As reported by Choubey , gold reached near-record highs of $2,915.76 per ounce, primarily driven by fears of escalating global trade tensions stemming from Trump's announcement of reciprocal tariffs on countries imposing duties on U.S. imports. This uncertainty has prompted investors to prioritize gold as a safe haven asset, especially in an environment marked by political and economic instability.
With Trump’s 25 percent tariffs on steel and aluminium imports kicking in this week, we look at why the price of the yellow metal has soared in recent days, why its value rises during periods of uncertainty, and whether some other assets are also benefitting from the Trump chaos.
A weaker dollar makes bullion more affordable for holders of other currencies.
Gold is being supported by the dollar's weakness and uncertainty over how Trump will engage with major trading partners in enforcing his tariff policy, said Kelvin Wong, senior market analyst, Asia Pacific, at OANDA.
U.S. goods.
Despite a hawkish stance from the U.S. Federal Reserve and slightly rising producer prices, the overall sentiment in the market favors bullion investment due to declining U.S. bond yields. The juxtaposition of these factors creates a unique scenario where traditional indicators for gold price decline are overshadowed by geopolitical risks associated with potential trade wars initiated by the new tariffs. The technical analysis also suggests that while gold remains in a strong uptrend, caution is warranted, given its overbought status.
Historically, periods of economic uncertainty have led to increased demand for gold as a store of value . For instance, similar spikes were observed during significant crises such as the 2008 housing market collapse and the geopolitical tensions following Russia's invasion of Ukraine in 2022. Thus, as Trump’s tariff policies unfold and their implications become more evident, it is likely that investor sentiment will continue to drive gold prices upward amidst ongoing market volatility.
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