Gold Soars to Record High as Trump’s Tariff Threats Fuel Safe-Haven Demand
The price of gold has surged to an all-time high, driven by concerns over President Donald Trump’s tariff measures and a weakening US dollar. As investors seek safety, bullion has become increasingly appealing, with prices rising as much as 1.4% to $2,798.59 an ounce.
Dollar Weakness Boosts Gold Appeal
A softer dollar makes gold more attractive to investors holding other currencies, as it’s priced in US dollars. The European Central Bank’s recent rate cut and the latest US GDP data, which showed an annualized 2.3% increase in the fourth quarter, have contributed to the dollar’s decline.
Trump’s Policies Fuel Uncertainty
The precious metal has been trading erratically since the US elections, with Trump’s victory initially sparking a selloff as investors flocked to riskier assets linked to his pro-growth agenda. However, the president’s repeated threats on tariffs have reignited haven demand, driving gold prices higher.
Stagflation Fears Boost Gold’s Appeal
According to Phil Streible, chief market strategist at Blue Line Futures, “You have the uncertainty of what’s going to happen with Trump, with his policies and tariffs and things like that could impact the growth of the United States.” Streible notes that gold is one of the best-performing commodities in a stagflationary environment, characterized by rising inflation and declining growth.
Federal Reserve in Wait-and-See Mode
Federal Reserve Chair Jerome Powell has stated that the US central bank is in a “wait-and-see” mode regarding the potential impact of the new administration’s policies. The Federal Open Market Committee has held interest rates steady, waiting to see further progress on inflation.
Tariff Fears and US Debt Concerns
Trump’s plans to impose tariffs on Mexico and Canada, as well as his intention to impose across-the-board levies, have already jolted the precious metals markets. Fears of the impact have driven US prices of gold and silver above their international benchmarks, with dealers and traders rushing to move the metals into the US before any tariffs are imposed. Ongoing worries over swelling US debt also make bullion appealing for investors.
Gold Rally Expected to Continue
Many analysts see the rally continuing this year as central banks seek to diversify their reserves and reduce their dependence on the dollar. Spot gold rose 1.2% to $2,791.79 an ounce as of 12:25 p.m. in New York, with investors positioning themselves for a potential stagflationary environment.
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