Gold prices surged to a new record, driven by growing anxiety surrounding the US-China trade conflict.
Spot gold reached $3,357.40 (£2,540) per ounce on Wednesday, briefly hitting its highest point before retracting. Since the beginning of the year, the price of gold has climbed by approximately 33%.
This increase follows remarks by the chairman of the US Federal Reserve, who warned that President Donald Trump’s tariff policies could lead to slower economic growth, rising prices, and greater unemployment risks.
Gold, traditionally seen as a safe haven in uncertain times, has attracted heightened attention from investors amid fears of global economic instability.
In a speech at the Economic Club of Chicago on Wednesday, Federal Reserve chair Jerome Powell stated that the recently imposed higher tariffs could significantly slow US economic expansion and raise consumer prices.
His remarks came after a period of volatility in global markets, triggered by the new import taxes and the intensifying trade war between the US and China.
Stephen Innes, head of trading and market strategy at SPI Asset Management, described gold’s rise as "full lifeboat mode," calling it "the most crowded trade on the planet."
He added that the US dollar was struggling under the pressure of shifting trade policies, and that investors had lost confidence in assets vulnerable to political interference.
Some analysts have drawn parallels between this year’s surge in gold prices and the Iranian Revolution, which saw a nearly 120% increase in gold prices from November 1979 to January 1980.
Gold surpassed $3,000 per ounce for the first time last month, as uncertainty over the trade war deepened.
Jesper Koll of Monex Group remarked that investors are turning to gold as "a trust hedge against both inflation and government recklessness."
"Everyone is seeking 'real' assets. It’s becoming clear that Trump’s 'move fast and break things' approach to policy-making won’t change," he said.
The US administration’s tariffs, which tax imported goods, have stoked fears of inflation, prompting a rush into safe-haven assets like gold.
Since returning to office in January, Trump has imposed tariffs of 145% on China, which in turn retaliated with a 125% tariff on US imports.
There is also uncertainty about whether US tariffs on other countries will be enacted after a 90-day pause.
The Trump administration claims these measures will revitalize US manufacturing, create jobs, and generate substantial tax revenues.
Source: BBC
BDST: 1203 HRS, April 17, 2025
SMS
