Gold prices surge to new heights amid escalating trade tensions, as investors seek safe haven assets amidst economic uncertainty.
Gold Hits Fresh Record High Over Trade War Impact Fears
The Safe Haven Asset in Turbulent Times
Spot gold has touched a fresh record high of $3,357.40 per ounce on Wednesday, before dipping from its peak. This latest move comes as investors fret over the impact of the trade war between the US and China.
Gold is a highly valued precious metal, prized for its rarity, durability, and versatility.
It has been used as a form of currency, jewelry, and industrial applications for thousands of years.
The value of gold is determined by supply and demand, with the price fluctuating based on market conditions.
Gold is also used in electronics, dentistry, and aerospace due to its high conductivity and resistance to corrosion.
The precious metal is viewed as a safer asset for investors during times of economic uncertainty. The head of the US central bank recently stated that President ‘President Donald Trump‘s tariff policies are likely to mean slower growth and higher prices,’ further fueling investor concerns.
A Crowded Trade: Gold’s Rise
Gold has risen by around 30% since the start of the year, with some analysts comparing this year’s rally to the Iranian Revolution more than four decades ago. The dollar is ‘stumbling under the weight of trade-policy whiplash,’ according to Stephen Innes from SPI Asset Management firm.
The introduction of tariffs by the Trump administration has fueled fears of inflation, driving investors to safe haven assets like gold. Investors are looking for ‘real’ assets that can provide a hedge against inflation and government recklessness, Jesper Koll from advisory firm Monex Group said.
The Impact of Trade Wars on Gold
The trade war between the US and China has introduced uncertainty about tariffs on a host of other countries. While the Trump administration claims the measures will bring manufacturing back to the US, create jobs for American workers, and generate billions of dollars in tax revenues, investors remain cautious.
In this environment, gold is seen as a safe bet. With its price crossing $3,000 an ounce last month, it has become ‘the most crowded trade on the planet,’ according to Innes.
