Ignacio Teson•Tuesday, February 4, 2025•1 min read
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Gold has regained its safe-haven status following Donald Trump’s presidency and amid continued monetary easing by central banks.
On Tuesday, gold prices hit a new all-time high, surpassing $2,870 per ounce, driven by global uncertainty after Trump’s threats to impose tariffs on major trading partners. The metal climbed to $2,871.66 per ounce, up 0.5%, while spot gold advanced 1% to $2,841.63 per ounce.
XAU/USD
Trade Tensions Fuel Market Volatility
In recent days, Trump announced new tariffs on imports from Canada, Mexico, and China. However, he later delayed implementation for Canada and Mexico after their governments pledged to deploy 10,000 troops along the border.
Despite this temporary reprieve, Trump maintained tariffs on China, which took effect Tuesday. In response, Beijing announced tariff increases to 15% and 10% on certain U.S. goods, imposed new export controls on key minerals, and launched an antitrust investigation into Google.
Gold’s Role Amid Trade War Uncertainty
Although the tariff pause for Mexico and Canada eased immediate tensions, global markets remain concerned about the risk of escalating trade wars, which could drive up prices while weakening economic growth. These uncertainties continue to push investors toward gold, reinforcing its role as a hedge against volatility.
Three Federal Reserve officials cautioned on Monday that Trump’s trade tariffs pose inflation risks, with one arguing that uncertainty over price trends calls for a slower pace of interest rate cuts than under normal conditions.
Gold is traditionally viewed as a hedge against both inflation and geopolitical uncertainty. However, higher interest rates diminish its appeal, as bullion does not generate interest income.
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
www.fxleaders.com