Gold Prices Surge to Historic Highs Amid Global Trade Tensions

Gold prices reached an all-time high on Thursday, surpassing $3,000 per ounce, as investors, alarmed by rising global trade tensions, sought safe-haven assets. The surge in gold prices comes amid fluctuating tariff announcements from the United States.

On Wednesday, the US implemented new tariffs on steel and aluminum, which heightened concerns in Asia, a region heavily reliant on exports, and prompted swift retaliatory measures from the European Union and Canada. Initially, US President Donald Trump had threatened to increase tariffs on Canadian metals to 50%, but reversed the decision after Ontario Premier Doug Ford opposed the plan, introducing a 25% surcharge on electricity exports to several US states.

Gold futures for April delivery briefly hit $3,003.90 per ounce on the Chicago Mercantile Exchange (CME) Thursday evening before retreating to $2,989.50. This marked the first time in history that a gold contract surpassed the psychological $3,000 threshold. Gold prices have surged nearly 14% year-to-date, following a solid 27% gain in 2024.

IG Market Strategist Yeap Jun Rong, quoted by Reuters, attributed the rally to a "risk-off" market sentiment, with investors anticipating worsening trade tensions and turning to gold as a hedge against market volatility.

In addition to concerns over global trade, analysts have linked the surge in gold prices to expectations of monetary policy easing by the US Federal Reserve. The Federal Reserve is expected to maintain its key interest rate in the range of 4.25% to 4.50% during its upcoming meeting next Wednesday.

“The potential impact of tariffs and trade threats is challenging to predict, forcing the Fed to rely on economic data to assess its next move,” John Ciampaglia, CEO of Sprott Asset Management, told the news agency. He noted that analysts believe the Fed is in a "wait-and-see" mode.

Gold prices set 40 record highs in 2024, fueled by rising geopolitical tensions in the Middle East and Eastern Europe, uncertainty surrounding the US presidential elections, interest rate cuts, and increased gold purchases by central banks, according to the World Gold Council.

Bart Melek, Head of Commodity Strategy at TD Securities, stated that central banks have significantly increased their gold holdings in recent years, driven by concerns over the long-term sustainability of the dollar’s purchasing power and escalating geopolitical tensions between major economic powers.

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