Gold reaches record high as traders scramble for safety
Jittery investors flocked to safe-haven assets on Thursday and pushed gold to a record high after US President Donald Trump unleashed more aggressive than expected import tariffs, kicking into higher gear an already heated global trade war.
Spot gold was up 0.5% at $3,148.05/oz by 3.25am GMT, after hitting a record high of $3,167.57 earlier in the session.
US gold futures firmed 0.2% to $3,172.60.
On Wednesday, Trump unveiled a 10% baseline tariff on all imports to the US and higher duties on dozens of countries, including some of the US’s biggest trading partners, deepening a trade war that has rattled global markets and bewildered US allies.
Analysts believe that Trump’s aggressive policy stance will slow down US economic growth and stoke inflation.
“There are a few reasons why tariffs are supporting gold demand. One is the slowdown that tariffs are likely to cause the US economy, raising the prospects of future rate cuts,” Capital.com financial market analyst Kyle Rodda said.
The Trump administration confirmed that the 25% global car and truck tariffs will take effect on April 3 as planned and duties on automotive parts imports will be launched on May 3.
Gold, traditionally seen as a hedge against political and financial instabilities, has surged more than 19% year to date due to uncertainty around tariffs, potential for interest rate cuts, geopolitical conflicts and central bank buying.
“There’s also some front running going on among traders who anticipate [Trump’s] policies will drive central banks to park their reserves in gold rather than US dollar-denominated assets,” Rodda said.
Meanwhile, US private payrolls increased more than expected in March, but that did not change economists' views that the labour market was slowing against the backdrop of mounting economic uncertainty.
All eyes are on the US nonfarm payrolls report due Friday for further clues into the Federal Reserve’s policy path.
Spot silver slipped 1.5% to $33.52/oz, platinum fell 0.7% to $977.17 and palladium lost 0.5% to $965.14.