Gold prices reached an all-time high on Tuesday, as investors flocked to the precious metal as a safe haven following China’s retaliatory tariffs on the U.S. in response to President Donald Trump’s trade policies.
Spot gold rose by 1.1%, reaching $2,844.56 per ounce as of 01:40 p.m. ET (1840 GMT), after briefly hitting a record high of $2,845.14 earlier in the session. U.S. gold futures also saw an increase, settling 0.7% higher at $2,875.80.
Bob Haberkorn, senior market strategist at RJO Futures, attributed the surge in gold prices to the news of the tariffs. “The tariff news came out like it did overnight; I think right now that’s the main driver,” Haberkorn said. “I think it’s going to overshadow any other data that comes out today.”
The dollar also played a role in boosting gold prices, as it fell by 0.9%, making gold more affordable for investors holding other currencies.
The escalation of the trade war between the world’s two largest economies came as China imposed tariffs on U.S. imports in response to new duties announced by the Trump administration. This move heightened tensions, even as Trump offered reprieves to Mexico and Canada.
As the trade war continues, concerns over inflation risks mounted. Three Federal Reserve officials cautioned on Monday that the uncertainty surrounding trade tariffs could warrant slower interest rate cuts than previously anticipated.
Additionally, U.S. job openings in December dropped to 7.6 million, falling short of the anticipated 8 million, signaling a potential economic slowdown.
Gold has long been viewed as a hedge against inflation and geopolitical uncertainty, but rising interest rates typically diminish the appeal of non-yielding assets like gold. Despite this, some analysts predict that gold prices could continue to climb. Jim Wyckoff, senior market analyst at Kitco Metals, speculated that the combination of market uncertainty under the current U.S. administration, alongside central banks diversifying from U.S. dollar holdings, could drive gold prices to $3,000 this year.
With key economic data on the horizon, including the ADP employment report on Wednesday, the payrolls report on Friday, and speeches from several Federal Reserve officials, investors are keenly watching for signals that may influence further movement in gold prices.
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