Gold prices reach record high amid U.S.-China trade war

Gold prices surged to an all-time high after gaining nearly 1% in the previous session, driven by heightened demand for safe-haven assets following the escalation of the U.S.-China trade war, according to Bloomberg.

On Wednesday, gold peaked at a historic $2,848.27 per ounce after President Donald Trump imposed a 10% tariff on Chinese imports the previous day, prompting China to respond swiftly but with more targeted measures.

The U.S. dollar index declined on Tuesday, making gold more affordable for global buyers. The losses accelerated after a U.S. jobs report signaled a gradual slowdown in the labor market.

China’s response was more measured compared to its reactions during Trump's first term. Previously, Beijing retaliated with nearly equal tariffs, but concerns remain over the potential impact on the world’s two largest economies.

Markets are also closely watching for any implications on U.S. monetary policy. If tariffs fuel inflation, the Federal Reserve may be forced to adjust its stance. While gold is expected to benefit from this outlook, rising interest rates could reduce its appeal.

Spot gold prices rose 0.2% to $2,847.85 per ounce at 8:46 AM Singapore time, while Bloomberg’s dollar index remained steady after a 0.7% decline on Tuesday. Silver prices dipped, palladium remained unchanged, and platinum saw a slight increase.

Concerns over the trade war have fueled demand for precious metals, even before Trump’s tariffs took effect.

In recent weeks, gold and silver prices in the U.S. have outpaced international benchmarks, prompting traders and distributors to export large quantities of metals to America before tariffs are enforced.

This turbulence has also driven up lending rates for gold and silver, as holders of these metals in London vaults capitalize on short-term lending opportunities in response to rising demand.