Gold hits record high as Trump tariffs spur safe-haven buying
Gold prices hit an all-time high on Monday, bolstered by safe-haven inflows after U.S. President Donald Trump's tariffs on Canada, China and Mexico added to concerns of inflation that would dent economic growth.
Spot gold rose 0.8% to $2,818.99 per ounce by 01:45 p.m. ET (1845 GMT), after hitting a record of $2,830.49 earlier in the session.
U.S. gold futures settled 0.8% higher at $2,857.10.
Despite the usual dampening effect of a strong dollar on the gold market, prices have been rallying due to the safe-haven demand driven by uncertainty surrounding Trump's tariffs, said David Meger, director of metals trading at High Ridge Futures.
The 25% tariffs imposed by Trump on Canadian and Mexican imports from Tuesday, along with a 10% charge on Chinese goods, fuelled fears of a trade war that could slow global growth and feed inflation.
Canada and Mexico ordered retaliatory measures while China said it would challenge the tariffs at the World Trade Organization and take unspecified countermeasures.
However, Trump announced a month-long pause on tariffs the U.S. had slapped on Mexico.
The market is not fully convinced about the extent of the trade war, Bart Melek, head of commodity strategies at TD Securities, said.
"We haven't seen a complete response from gold and if this trade war continues for a considerable period, it could lead to significantly higher gold prices down the road," Melek added.
Gold is often considered as a safe-haven investment during periods of economic or geopolitical instability.
J.P. Morgan said bearish contagion from equities could weigh on gold in the near term, but disruptive tariffs were a medium-term bull case for bullion.
Investors await data this week on U.S. job openings, the ADP employment report and the U.S. employment report to gauge the health of the U.S. economy.
Meanwhile, bullion banks are transporting gold from Asian trading hubs like Dubai and Hong Kong to the U.S. to profit from the unusually high U.S. gold futures premium over spot prices.
Spot silver rose by 0.8% to $31.56 an ounce, platinum lost 1.5% to $963.40 and palladium rose 0.5% at $1,012.85.
