Gold has surged to a new all-time high as investors become increasingly concerned about the repercussions of the ongoing trade conflict between the United States and China.
On Wednesday, spot gold reached $3,357.40 (£2,540) per ounce before retreating slightly from that pinnacle. Since the beginning of the year, it has appreciated by about 30%.
This latest increase follows comments from the head of the US central bank, indicating that President Donald Trump’s tariff initiatives may result in reduced economic growth alongside rising consumer prices.
Gold is perceived as a safer investment choice during periods of economic turbulence.
During a speech at the Economic Club of Chicago on Wednesday, Federal Reserve Chair Jerome Powell stated that the recently announced tariffs, which were higher than anticipated, are likely to slow down US economic growth and increase costs for consumers.
These remarks came amidst significant volatility in global financial markets as investors responded to new import duties and the intensification of the trade dispute between the US and China.
According to Stephen Innes from SPI Asset Management, gold is in “full lifeboat mode,” having become “the most crowded trade on the planet.”
He further noted, “The dollar is stumbling under the burden of trade-policy whiplash, and portfolio managers have lost confidence in anything influenced by political discretion.”
Analysts have drawn parallels between this year’s surge in gold prices and the Iranian Revolution over forty years ago, which saw prices soar nearly 120% from November 1979 to January 1980.
Gold surpassed the $3,000 per ounce mark for the first time last month as uncertainties regarding the consequences of a global trade war began to settle.
Jesper Koll from advisory firm Monex Group mentioned that investors are turning to gold as “a trust hedge against both inflation and governmental recklessness.”
“Everyone is seeking ‘real’ assets. It’s becoming increasingly evident that Team Trump’s ‘move fast and break things’ strategy regarding policy will persist,” he added.
The imposition of tariffs by the Trump administration, which are taxes levied on businesses importing goods from abroad, has heightened concerns regarding inflation, prompting investors to gravitate towards safe-haven assets like gold.
Since returning to the White House in January, Trump has enacted a 145% tariff on imports from China, to which China has responded with a 125% tariff on US products.
There is also ongoing uncertainty about whether broad US tariffs on several other countries will take effect after being suspended for a period of 90 days.
The Trump administration asserts that these measures will facilitate the return of manufacturing to the US, generate jobs for American workers, and yield billions in tax revenue.
