Market Analysis
Image Credit: Reuters
Gold prices rose slightly on Wednesday as investors flocked to the safe-haven asset ahead of the potential impact from new reciprocal tariffs that U.S. President Donald Trump plans to impose on global trading partners.
As of 0710 GMT, spot gold was up 0.1% at $3,113.24 per ounce, having hit a record high of $3,148.88 on Tuesday. U.S. gold futures edged down 0.1% to $3,141.80.
Aakash Doshi, global head of gold strategy at State Street Global Advisors, said, “In a bullish scenario, the market could test $3,400 per ounce within the next nine months.”
Anticipation surrounding Trump's new tariffs, set to be announced at 2000 GMT on Wednesday, is creating market suspense. The White House confirmed that new tariffs would be introduced but did not provide specifics on the size or scope.
Trump’s tariff policies could ignite inflation, slow economic growth, and escalate trade tensions.
Philip Newman, managing director of Metals Focus, noted, “The main driver of these successive record highs has been safe-haven buying, with geopolitical uncertainty showing no signs of easing.”
Newman added that a potential U.S. economic slowdown, higher inflation, and interest rate cuts could drive gold prices up to $3,300 in the coming months.
Gold’s rally has also been fueled by strong demand from central banks, expectations of rate cuts by the Federal Reserve, geopolitical instability in the Middle East and Europe, and increased investments in gold-backed exchange-traded funds.
Gold is seen as a hedge against political instability and inflation.
Fed officials are concerned that employment could decline, but tariff-induced inflation limits their ability to take action.
Markets are also waiting for the U.S. ADP employment report later in the day, followed by non-farm payrolls data on Friday.
Meanwhile, spot silver dropped 0.3% to $33.63 an ounce, platinum declined 0.5% to $974.90, and palladium fell 0.3% to $980.67.
Paraphrasing text from "Reuters" all rights reserved by the original author