Gold Prices Surge Amid Trade War Fears
Gold prices reached a historic high on Wednesday, driven by escalating concerns about a potential new trade war between the United States and China. This surge in gold was catalyzed by China’s decision to impose tariffs on American imports, a direct response to the recent increase in U.S. duties on Chinese goods.
In immediate trading, gold saw a 0.2% increase, reaching $2,848.69 per ounce by 02:53 GMT, after previously hitting a record high of $2,853.97 during the session. Meanwhile, U.S. gold futures also rose by 0.2%, climbing to $2,879.70.
U.S. President Donald Trump indicated on Tuesday that he is not in haste to engage with Chinese President Xi Jinping in efforts to alleviate the prevailing trade tensions between the two largest economies globally.
On the same day, China levied targeted tariffs on U.S. imports and alerted various American companies, including Google, of potential sanctions, in what appears to be a calculated response to Trump’s customs duties.
"The next critical threshold for gold could be the $3,000 mark… Should the trade war intensify, China may be more inclined to continue accumulating gold as reserves," noted Elia Spavak, head of global economics at the investment firm.
In related news, three officials from the U.S. Federal Reserve expressed concerns on Monday regarding the Trump administration’s trade policies, citing potential risks of inflation. One official emphasized that the uncertainty surrounding price expectations could necessitate a more cautious approach to interest rate adjustments than usual.
Gold is traditionally viewed as a hedge against inflation, which means that rising interest rates could diminish its appeal to investors.
In the precious metals market, silver also saw a 0.2% increase, settling at $32.15 per ounce, while platinum rose by 0.3% to $966.95. Conversely, palladium experienced a decline of 0.9%, trading at $981.75.
This volatility in precious metals is closely tied to ongoing developments in international trade and economic policies, making it essential for investors to stay informed.