Gold Surges to New Heights as Trade Tensions Fuel Safe-Haven Demand

Image Credit: Reuters

Gold reached an all-time high on Friday, driven by mounting concerns over U.S. tariffs, escalating trade tensions, and rising expectations of Federal Reserve monetary policy easing.  

Spot gold dipped slightly by 0.1% to $2,983.78 an ounce as of 0132 GMT, after briefly touching a record $2,990.09 earlier in the session—just shy of the key $3,000 threshold. The precious metal is on track for a second consecutive weekly gain, up 2.5% so far. Meanwhile, U.S. gold futures edged up 0.2% to $2,996.70.  

IG market strategist Yeap Jun Rong noted that investors are adopting a risk-averse stance, anticipating further trade tensions before any resolution. As a result, gold remains a preferred safe-haven asset to hedge against market volatility.  

In the latest development of President Donald Trump’s ongoing trade disputes, the European Union retaliated against U.S. tariffs on steel and aluminum by imposing a 50% levy on American whiskey exports. In response, Trump threatened on Truth Social to introduce a 200% tariff on European wines and spirits.  

“With gold approaching the psychological $3,000 mark and the potential for reciprocal tariffs triggering further market disruptions in the second quarter, the metal continues to be an attractive safe-haven asset amid limited alternatives,” Rong added.  

Trump’s tariffs are widely expected to fuel inflation and economic uncertainty, pushing gold to multiple record highs in 2025. Historically, gold serves as a hedge against political instability and rising prices.  

Investors are now looking ahead to the Federal Reserve’s policy meeting next Wednesday, where the central bank is expected to maintain its benchmark interest rate in the 4.25%-4.50% range. Lower interest rates tend to support non-yielding assets like gold.  

Meanwhile, geopolitical tensions persist as Russian President Vladimir Putin stated on Thursday that Russia, in principle, supports a U.S. ceasefire proposal for Ukraine but requires further clarifications and conditions, making an immediate resolution unlikely.  

Among other precious metals, spot silver slipped 0.2% to $33.72 an ounce, platinum inched up 0.1% to $995.30, and palladium climbed 0.7% to $964.32.

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author