Gold prices surged to a record high in Asian trade on Wednesday, driven by increased demand for safe-haven assets amid escalating fears of a U.S.-China trade war and geopolitical uncertainty in Gaza.
Spot gold rose by 0.6%, reaching an all-time high of $2,858.27 per ounce, while April gold futures gained 0.4%, trading at $2,885.39 per ounce. This rally came as concerns over the U.S.-China trade tensions and U.S. President Donald Trump’s recent comments on Gaza fueled haven buying in the precious metal.
Trump’s statements regarding a U.S. takeover of the Gaza Strip and the relocation of Palestinians triggered a sharp response from multiple countries in the region, further exacerbating fears of heightened geopolitical tensions.
U.S.-China Trade War Escalates
Gold prices were further supported by the weakening U.S. dollar, which reversed its earlier gains after President Trump delayed trade tariffs on Mexico and Canada. However, no such reprieve was offered to China, as Trump maintained his stance on imposing tariffs on Chinese goods. This led to a retaliatory response from Beijing, with China introducing its own import tariffs, export controls, and restrictions on select U.S. companies, including Google.
Trump also indicated that he was not in a rush to engage in talks with Chinese President Xi Jinping, diminishing prospects for a quick de-escalation of the ongoing trade conflict. The continued U.S.-China trade tensions are seen as a potential threat to global trade, particularly as fears grow over the possibility of broader tariffs, including on Taiwan and Europe.
Analysts warn that prolonged tariffs could lead to higher inflation in the U.S. and sustain elevated interest rates, which might reduce gold’s long-term appeal as an investment. However, the immediate risk of economic disruption has kept traders focused on safe-haven assets like gold.
Other Precious Metals and Industrial Metals See Decline
While gold prices soared, other precious metals experienced slight declines. Platinum futures dropped to $1,011.30 per ounce, and silver futures fell by 0.3%, settling at $32.938 per ounce. Among industrial metals, copper prices remained steady, with benchmark copper futures on the London Metal Exchange holding at $9,193.50 per ton.
Geopolitical Tensions in Gaza Heighten Risk Sentiment
In addition to the trade war, Trump’s remarks regarding Gaza further intensified safe-haven demand for gold. Speaking alongside Israeli Prime Minister Benjamin Netanyahu, Trump proposed that the U.S. take control of the Gaza Strip, leveling the area and rebuilding it as an economic hub. He also reiterated his calls to resettle Palestinians in neighboring countries.
These comments, which depart significantly from longstanding U.S. policy in the Middle East, drew immediate backlash from Palestinian leaders and several Arab nations. The potential for a renewed geopolitical crisis in the Middle East has further fueled investor anxiety, driving up demand for gold as a hedge against uncertainty.
As global trade and geopolitical tensions remain on edge, gold’s safe-haven status continues to attract investors, while other metals and markets remain affected by the ongoing volatility.
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