Gold prices hit a record high on Friday, with investors breaking $3,000 per troy ounce for the first time, considering Trump's appeal tariff policies, fears of economic slowdowns and sinking stock markets.
Gold is often sought by investors as a safe haven during times of chaos, with prices rising around 14% this year. In contrast, the S&P 500 index fell into the revision Thursday, falling more than 10% over the past month as investors worried about Trump's economic agenda.
Marketwatchers are upgrading their forecasts and predicting more room for a trade war driven by the tart tariffs among many of the world's largest economies, causing the economic outlook to be bleak.
The US round of tariffs has quickly met retaliatory taxes by China, the European Union and Canada, spurring further escalation from the White House. On Thursday, Trump threatened to punish tariffs on European wine. This is a movement that rattles producers and distributors on both sides of the Atlantic.
“While the general uncertainty and the worsening economic atmosphere have improved interest in gold, most of the gold price actions are related to uncertainty related to tariffs,” Helimacroft, head of the RBC Capital Market's Global Commodity Strategy, said in a research note.
Additionally, tariffs could be applied directly to gold imports, leading to US stockpiling. Recent trade statistics are skewed by the enormous flow of gold from London's vault and Swiss refineries to US warehouses.
Central banks around the world have also been large buyers of pensions in recent years, and longer-lasting factors have driven prices up. Diversifying reserves with gold, which is considered valuable stores that are not subject to geopolitical impact, is often said to be a move to reduce dependence on the dollar, the US Treasury and other foreign currency assets.
Eshe Nelson and Bernhard Warner Reports of contributions.
