NEW YORK: Gold blazed past the $3,200 mark on Friday, as a faltering dollar and an escalating US-China trade war stirred recession fears, sending investors flocking to the safety of the yellow metal. Spot gold was up 1.8% at $3,230.75 an ounce at 9:30 a.m. ET (1330 GMT), after hitting a record high of $3,237.56 earlier in the session. Bullion is up over 6% this week. US gold futures climbed 1.8% to $3,234.90.
“Gold is clearly seen as the favoured safe-haven asset in a world upended by Trump’s trade war. The US dollar has depreciated, and US Treasuries are selling off hard, as faith in the US as a reliable trading partner has diminished,” said Nitesh Shah, commodities strategist at WisdomTree.
China increased its tariffs on US imports to 125% on Friday, raising the stakes in a confrontation between the world’s two largest economies. The dollar fell against its peers, making greenback-priced bullion cheaper for overseas buyers. A combination of central bank buying, US Federal Reserve rate cut expectations, geopolitical instabilities and a surge of investor flows into gold-backed ETFs has also supported gold’s rally this year.
US monthly producer prices unexpectedly fell 0.4% in March, but tariffs on imports are expected to drive inflation higher in the coming months.
Traders now bet that the Fed will resume cutting rates in June and see around 90 basis points worth of cuts by the end of 2025. “A minor correction (for gold) wouldn’t surprise, but the path forward is up and away as CPI and PPI gives the Fed more room to cut and will keep downward pressure on the dollar,” said Tai Wong, an independent metals trader.
Non-yielding gold, a traditional hedge against global uncertainties and inflation, also tends to thrive in a low interest rate environment.
But certain developments could cap gold’s rise, UBS analysts said in a note, including “easing geopolitical tensions, a return to more cooperative trade relations, or a significant improvement in the US macro and fiscal backdrop.” Spot silver gained 1.4% to $31.64 an ounce, while platinum added 0.4% to $941.90. Palladium advanced 1.3% to $919.25.
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