Safe-haven gold surges to historic peaks following Trump's tariff announcements

Gold surged over 1% on Monday, as the recent tariff announcements by U.S. President Donald Trump intensified concerns about a global trade conflict, driving demand for the safe-haven metal and escalating bullion prices to unprecedented levels.

 

Spot gold rose 1.2% to reach $2,895.38 per ounce, as of 0758 GMT. Earlier in the session, the metal hit a record high of $2,896.35, marking its seventh such achievement this year. U.S. gold futures also increased by 1.2% to $2,920.8.

 

"Trump's announcement of new tariffs is bolstering worries about inflation and economic growth, boosting demand for gold. We expect continued price support, with gold projected to reach $3,000 per ounce," stated UBS analyst Giovanni Staunovo.

 

Over the weekend, Trump declared he would introduce new 25% tariffs on Monday on all imports of steel and aluminum into the U.S., which would add to existing metal duties, marking another significant escalation in his trade policy strategy.

 

Trump further announced that he would reveal reciprocal tariffs on Tuesday or Wednesday, to be implemented almost immediately, applying them to all countries and matching the tariff rates imposed by each nation.

 

"The possibility of gold also becoming entangled in the retaliatory tariffs is causing market disruptions," noted Daniel Hynes, senior commodity strategist at ANZ bank.

 

Federal Reserve officials on Friday highlighted the ongoing uncertainty regarding the impact of Trump's policies on economic growth and persistently high inflation, emphasizing their cautious stance on rate cuts as the U.S. job market remains robust.

 

Gold is regarded as a secure investment during times of economic and financial uncertainty, although rising interest rates tend to diminish the appeal of the non-yielding asset.

 

"I do not foresee a significant likelihood of a gold price correction at the moment, unless there is a substantial rise in the U.S. dollar," said Kelvin Wong, OANDA's senior market analyst for the Asia-Pacific region.