Gold rises to all-time high on US-China tariff war
Wed Feb 05 2025
Gold prices hit a record high on Feb 5, bolstered by fears of a new trade war between the United States and China after Beijing slapped tariffs on US imports in a response to new US duties on Chinese goods.
Spot gold was up 0.2 per cent at US$2,848.69 per ounce, as of 0253 GMT, after hitting a record high of US$2,853.97 earlier in the session. US gold futures gained 0.2 per cent to US$2,879.70.
US President Donald Trump said on Feb 4 he is in no hurry to speak to Chinese President Xi Jinping to try to defuse the trade tensions between the world’s two largest economies.
China imposed targeted tariffs on US imports on Feb 4 and put several companies, including Google, on notice for possible sanctions, in a measured response to Trump’s tariffs.
“The next major inflection point for gold is probably the US$3,000 figure... China may be more encouraged to keep buying gold for reserves if the trade war escalates,” said Ilya Spivak, head of global macro at Tastylive.
The Trump administration’s plans for trade tariffs come with inflation risks, three Federal Reserve officials warned on Feb 3, with one arguing that uncertainty over the price outlook calls for slower interest rate cuts than otherwise.
Gold is considered an inflation hedge, though if interest rates go up, they could dampen its appeal among investors.
“Gold demand ought to be partially supportive for other precious metals but their sensitivity to risk appetite has seen them underperform,” said Mr Spivak.
Spot silver rose 0.2 per cent to US$32.15 per ounce, platinum edged 0.3 per cent higher to US$966.95, and palladium fell 0.9 per cent to US$981.75.