Gold Reaches Record High as Trump Tariffs Fuel Safe-Haven Demand

Gold prices surged to an all-time high on Thursday, with bullion hitting $3,167.57 an ounce as investors flocked to safe-haven assets in response to heightened trade tensions, Reuters reports.

The sharp rally came after US President Donald Trump unveiled a 10% baseline tariff on all imports to the US, stoking fears of a worsening global trade war and further economic instability.

By 0520 GMT, spot gold had settled slightly lower at $3,132.69, though still near its record peak. US gold futures also dipped 0.4% to $3,155.00. The surge in gold prices reflects growing concerns over the potential impact of Trump’s new tariffs, which include a 25% duty on global car and truck imports set to take effect on April 3, with additional tariffs on automotive parts expected in May.

The aggressive tariff announcements from the Trump administration have sparked fears of a slowdown in the US economy, which could lead to future rate cuts by the Federal Reserve. This speculation has contributed to the rising demand for gold, which is often seen as a safe-haven asset during times of economic or political uncertainty.

Gold’s rally in recent months has been driven by multiple factors, including concerns about the economic effects of tariffs, geopolitical tensions, and potential central bank buying. Gold has gained more than 19% year-to-date, with traders anticipating that the economic fallout from Trump’s policies may prompt central banks to move away from US dollar-denominated assets in favor of gold.

Market analyst Kyle Rodda from Capital.com noted that the tariffs are likely to slow the US economy, adding to expectations that the Federal Reserve may lower interest rates in the future, further supporting gold prices. Additionally, there is speculation among traders that central banks may increasingly turn to gold as a reserve asset amid heightened geopolitical risks.

While the gold market continues to show strong momentum, some analysts, such as Matt Simpson from City Index, suggest that the rally could continue as long as the trade war intensifies. However, there are also concerns that a volatile market shakeout could eventually temper the bullish momentum.

The broader financial markets are closely watching economic data, including the March US private payrolls report, which showed an unexpected increase in job growth. However, economists remain cautious, pointing to signs of a slowdown in the labor market amid rising economic uncertainty. The market is also awaiting the US non-farm payrolls report, which is due on Friday and could provide further insight into the Federal Reserve’s future policy direction.

Other precious metals also experienced declines, with spot silver falling 2.6% to $33.13 per ounce, platinum dropping 1.6% to $968.24, and palladium losing 1.4% to $956.50.