Gold Run Continues Amid Growing Trade War Concerns

 

Trade War Fears Drive Gold Prices Higher

(Bullion News Network) – Gold prices increased today, although not by much. The precious metal briefly peaked at an all-time high of $2,885/86/ozt at 9:30 AM CST before stabilizing in the $2,860-70 range later in the day. Gold is up around $5 on the day and nearly $70/ozt since last Friday. Geopolitical uncertainty and safe haven demand continue to be core drivers of price action in the precious metals market. In particular, tensions between the U.S. and China have prompted concerns that a trade war may be on the horizon. President Trump’s White House has suggested that the administration plans to leverage significant sanctions against several of America’s allies and adversaries, including China, Canada, Mexico, and the European Union. 

Gold set several new all-time highs throughout the week as traders reacted to President Trump’s 25% tariffs on Canada and Mexico, which were slated to go into effect over the weekend before being narrowly averted by an agreement between the American leader and the two countries. Meanwhile, the Trump administration continues to emphasize the vital role that tariffs will play in the president’s foreign policy over the next four years. Because of the likelihood that aggressive tariffs could lead to trade wars between the U.S. and other world powers, demand for safe haven assets like gold has skyrocketed. 

Today’s price action marks gold’s sixth consecutive weekly gain, and the precious metal is up by over 9.1% on the year. Analysts say that geopolitical uncertainty in the wake of President Trump’s first couple weeks back in the White House is likely motivating the strong start to 2025. British investors reported extended wait times to withdrawal their gold from the Bank of England as traders raced to ship gold to the United States, another signal that the flight to safe haven assets may be far from over. 

Silver retreated on Friday but remains up on the week. The spot price of silver dropped $0.35, falling below $32/ozt The gold-silver ratio remained relatively static this week and will end Friday at 89.72:1. Platinum and palladium also lost marginally on the day, with platinum falling just below $1,000 per troy ounce and palladium hanging on above that same level. 

U.S. Jobs Report Temporarily Stalls Gold Rally

Mixed signals from today’s employment situation summary from the Bureau of Labor Statistics may have also driven gold prices down after a brief peak early in the trading day. The U.S. economy added only 143,000 jobs in January, less than the 169,000 forecast. On the flip side, the unemployment rate dropped to 4%, outpacing expectations and drawing the United States economy closer to its lowest unemployment rate in history. Wall Street backed down on the news, as well as a growing sense of uncertainty concerning inflation and the possibility of trade wars. 

The consumer sentiment report for February shows that Americans remain concerned about the potential economic impacts of President Trump’s tariff plans, especially as they relate to the price of goods. Reuters reports that inflation expectations surged in January as President Trump prepared to utilize tariffs as a tool to pursue his administration’s economic and foreign policy objectives. Overall consumer sentiment dropped to a seven-month low, falling by more than economists expected as Americans expressed concerns about how President Trump’s tariff plans may impact purchasing power. 

It is worth noting that consumer sentiment readings varied based on the political affiliation of respondents, with self-identified Republicans expressing confidence nearly 25 points higher than self-identified Democrats. Republican consumer sentiment also dropped in January, however, after President Trump announced and then delayed his planned tariffs on Canada and Mexico. 

Gold and silver will end Friday up on the week as Americans seek safe haven assets in the face of a range of geopolitical and economic uncertainties.