By: International Desk Report
Gold prices have reached new heights as investors react to escalating tensions from the ongoing trade war between the United States and China. On Wednesday, spot gold peaked at $3,357.40 (£2,540) per ounce before slightly retreating. The precious metal has seen a remarkable increase of approximately one-third since the beginning of the year.
This surge follows comments from Federal Reserve Chair Jerome Powell, who indicated that President Donald Trump’s tariff policies could lead to slower economic growth, higher prices, and increased unemployment risks. As concerns mount over the potential economic fallout from new tariffs, gold is being viewed as a safe haven asset during this period of uncertainty.
During a speech at the Economic Club of Chicago, Powell warned that the higher-than-expected tariffs could adversely affect consumer prices and overall economic growth in the US. His remarks come amid a turbulent phase for global financial markets as investors adjust to the implications of the new import taxes and the intensifying trade conflict.
Stephen Innes, head of trading and market strategy at SPI Asset Management, described gold’s current status as being in “full lifeboat mode,” emphasizing its popularity among investors. “The dollar is stumbling under the weight of trade-policy whiplash, and portfolio managers have lost faith in anything that involves political discretion,” he noted.
Analysts have drawn parallels between this year’s gold rally and the price surge in the late 1970s during the Iranian Revolution, when prices skyrocketed by nearly 120% from November 1979 to January 1980. Recently, gold prices crossed the $3,000 mark for the first time, reflecting growing unease over the trade war’s potential impacts.
Jesper Koll from advisory firm Monex Group highlighted that investors are increasingly turning to gold as a “trust hedge” against inflation and government instability. “Everyone is looking for ‘real’ assets,” he stated, noting the unpredictability of current US policies.
The Trump administration’s introduction of tariffs—145% on Chinese imports since January—has heightened fears of inflation, prompting a rush towards gold and other safe haven assets. In retaliation, China has imposed a 125% tariff on US goods, further complicating the trade landscape.
Additionally, there remains uncertainty regarding the potential implementation of sweeping US tariffs on various other countries, which have been paused for 90 days. The administration claims these measures will revitalize US manufacturing, create jobs, and generate substantial tax revenue.
As the trade war continues to unfold, the implications for global markets and investor behavior remain significant, with gold standing out as a critical asset in uncertain times.
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