Gold prices soared to a record high on Monday as investors turned to safe-haven assets following US President Donald Trump's decision to impose tariffs on Canada, Mexico, and China, while also warning of potential levies on the European Union, news agency Reuters reported. The move intensified fears of rising inflation and its possible effects on economic growth.
Spot gold climbed 0.6% to $2,816.53 per ounce ( ₹78,908 per 10 grams) by 09.38 am ET (1438 GMT), after briefly touching an all-time high of $2,818.58 ( ₹78,965 per 10 grams) earlier in the session. Meanwhile, US gold futures advanced 0.7% to $2,855.90 ( ₹80,035 per 10 grams), trading at a higher premium compared to spot prices.
Phillip Streible, chief market strategist at Blue Line Futures, commented on the situation, and told Reuters, “It's the implications of the tariffs... a lot of people believe that this could raise inflation upwards and also impact economic growth because of the higher costs involved with that and tariffs leaving a stagflationary type environment.”
Gold is traditionally seen as a safe-haven asset during periods of economic and geopolitical instability.
Trump's tariffs on Canadian and Mexican imports
Donald Trump's 25% tariffs on Canadian and Mexican imports starting Tuesday, along with a 10% levy on Chinese goods, have escalated fears of a trade war that could slow global growth and increase inflation.
{{/usCountry}}Donald Trump's 25% tariffs on Canadian and Mexican imports starting Tuesday, along with a 10% levy on Chinese goods, have escalated fears of a trade war that could slow global growth and increase inflation.
{{/usCountry}}In response, Canada and Mexico announced retaliatory measures, while China pledged to challenge the tariffs at the World Trade Organization (WTO) and implement unspecified countermeasures.
Concerns over a potential trade war have already shaken precious metals markets, with US gold and silver prices surpassing international benchmarks in recent weeks. This has prompted dealers and traders to rush large quantities of the metals into the US before any tariffs are enforced. The turmoil has also resulted in a sharp increase in lease rates for gold and silver — the returns that bullion holders in London's vaults can earn by lending out metal on a short-term basis.
Bart Melek, head of commodity strategies at TD Securities, pointed out that the market remains uncertain about the full impact of the trade war, saying, "We haven't seen a complete response from gold, and if this trade war continues for a considerable period, it could lead to significantly higher gold prices down the road."
J P Morgan suggested that while bearish trends in equities might temporarily weigh on gold prices, ongoing trade disruptions present a medium-term bullish outlook for bullion.
Investors are now awaiting key US economic data this week, including job openings, the ADP employment report, and the US employment report, to gauge the state of the economy.
Meanwhile, spot silver rose 0.1% to $31.33 ( ₹877 per 10 grams), platinum declined 2.2% to $956.45 ( ₹26,806 per 10 grams), and palladium fell 0.3% to $1,005.25 ( ₹28,160 per 10 grams).
(With inputs from Reuters, Bloomberg)