Gold prices hit record high as Trump’s tariff threats spark safe-haven rush

Gold soared to a new all-time high, as investors fled to safe-haven assets after U.S. President Donald Trump doubled down on his threats to impose 25% tariffs on Mexico and Canada starting Feb. 1. The metal rose 0.2% to $2,799.65 per ounce after surging 1.3% on Thursday, breaking its previous record from October, according to Bloomberg.

Trump also hinted at targeting China with new tariffs, though he did not specify the rate, further fueling market uncertainty.

Gold’s winning streak

Gold is now on track for its fifth consecutive weekly gain, as fears of escalating trade wars and economic fallout drive demand for safe assets.

Beyond tariffs, Trump’s pledges to implement tax cuts and immigration reforms have raised concerns about U.S. fiscal stability and the potential for higher inflation. Federal Reserve Chairman Jerome Powell signaled Wednesday that the Fed remains in a "wait-and-see" stance, assessing the long-term effects of the administration’s policies.

U.S. economy grows 2.3% in Q4 2024 amid policy uncertainty

Despite trade tensions, the U.S. economy expanded by 2.3% in the final quarter of 2024, buoyed by strong consumer spending that helped counter the effects of the Boeing strike and lower inventory levels.

Meanwhile, the Federal Open Market Committee (FOMC) held interest rates steady this week, following three consecutive cuts since September. Policymakers emphasized that stubborn inflation trends warrant a cautious approach moving forward.

Investors are now eyeing the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Index, due for release on Friday. Analysts surveyed by Bloomberg expect a modest uptick in inflation, which could influence the Fed’s next policy move.

Gold holds steady, dollar gains

As of 8:22 a.m. in Singapore, spot gold climbed 0.1% to $2,797.82 per ounce, while the Bloomberg Dollar Index edged up 0.1%. Other precious metals, including silver, palladium, and platinum, remained stable.

With global markets on edge and uncertainty mounting, all eyes are on the Fed’s next move and the impact of Trump’s trade policies on economic growth.