Gold Hits New All-Time High Amid Tariff Turmoil

 

Gold Hits New All-Time High Amid Global Tariff Turmoil

(Bullion News Network) – Gold cruised past another all-time high Friday morning, crossing $3,225/ozt for the first time ever. The new record comes only days after tariff-fueled panic triggered a selloff and drove the spot price of gold below $3,000 per troy ounce. Uncertainty remains a consistent demand driver for safe haven metals as global markets fret over the potential ramifications of U.S. President Donald Trump’s ongoing trade war with China. The American leader put a 90-day pause on his “Liberation Day” tariffs Wednesday afternoon, providing Wall Street with some much-welcome relief. Analysts say that the global economy may still not be out of the woods, though. In the same Truth Social post where he announced the 90-day tariff pause, President Trump also raised tariffs on Chinese imports to an effective rate of 145%. 

American markets showed signs of life to end the trading week. The Dow, S&P 500, and Nasdaq composite all rose today amid a highly volatile trading session. The three indexes began Friday in the red before staging a comeback during the afternoon. Despite the surge, analysts say that global confidence in the U.S. economy may be waning. AP News reports that a “freak” selloff of U.S. bonds, which are traditionally considered safe haven assets, has spooked American economists. 10-year Treasury yields jumped to 4.58% this morning and then dropped to 4.50%. Stocks and U.S. Treasury bonds moved in tandem this week, raising red flags among some investors. It is not yet clear what is causing the volatility in U.S. bond markets, but experts say that the recent move may border on unprecedented. The liquidity and historical safety of Treasury bonds caused investors to buy them up during the 2008 Financial Crisis – even during weeks of freefall on Wall Street. 

To some traders, the bond situation underscores growing global uncertainty surrounding the stability of the U.S. economy, and particularly the United States dollar. The U.S. dollar is the most widely used reserve currency in the world, but the looming U.S.-China trade war may pose a threat to the stability and dominance of the dollar. Earlier this week, China announced more tariffs on American goods in retaliation to President Trump’s tariffs, bringing the total effective tax on American imports to 125%. With both U.S. and Chinese leaders claiming that they will not back down, global markets are bracing for a prolonged trade war between the world’s two largest economies that experts say could directly impact prices for consumers. 

Precious metal prices will end the week up as safe haven appetite continues to climb. Gold set a new all-time high above $3,240 per troy ounce amid a historically volatile global market. The spot price of silver jumped by over $1, bringing the week’s gains to beyond $2.50/ozt in the metal’s third consecutive day in the green. Friday’s price action favored silver, driving the gold-silver ratio down 1.42 points to 100.08:1. Safe haven demand for precious metals remains historically high as Wall Street exhibits uncharacteristic volatility in the wake of the White House’s tariffs. 

Gold and silver prices jumped this week despite welcome news that inflation could be slowing. Thursday’s Consumer Price Index (CPI) report showed that inflation cooled in March by more than expected. The CPI is one of the Fed’s core measures of inflation, but the drop in consumer prices did little to impact the market’s projections for how the FOMC is likely to vote at its next meeting in May. CME FedWatch now projects a 21.4% probability of a 25-point cut in May, down from 27% yesterday, 33.3% one week ago, and 37.4% last month. The odds of a rate cut peaked at nearly 50% Wednesday morning before dropping to 14.4% once President Trump announced a 90-day pause on his historic slate of tariffs against America’s trade partners. 

Federal Reserve Chair Jerome Powell has previously expressed concerns that President Trump’s tariff plans may delay the FOMC as it works to maximize employment and bring inflation down to its longstanding target of two percent. Chair Powell had this to say to reporters after the Fed’s March meeting:

Inflation has started to move up now, we think partly in response to tariffs and there may be a delay in further progress over the course of this year. So, that’s the hard data. Overall, it’s a solid picture.

President Trump has repeatedly asked Jerome Powell, who has been the Chairperson of the Federal Reserve since 2018, to lower interest rates. In a Truth Social post last Friday, the U.S. leader urged Powell to act quickly to cut rates, accusing the veteran economist of playing politics.

This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always “late,” but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months – A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!

Rate cut speculation drove much of gold’s 2024 price run, so precious metal traders are likely to follow along as upcoming economic data reports provide the FOMC with more insight into the state of the American economy.