Gold has surged past $3,100 per ounce for the first time ever, marking a historic milestone as growing fears of a global trade war and potential stagflation in the U.S. fuel demand for the precious metal. This surge reflects the intensifying global risk-aversion sentiment, with investors flocking to gold as a safe-haven asset amid the rising uncertainty.
A Wall Street Journal (WSJ) report has underscored the rising tensions, highlighting that U.S. President Donald Trump could announce higher and broader reciprocal tariffs on April 2, potentially triggering a new wave of market panic. The report indicates that U.S. advisers are considering imposing global tariffs of up to 20%, which would affect virtually all U.S. trading partners.
Tariff War and Stagflation Fears
The looming threat of a widespread tit-for-tat tariff war has stirred anxiety in the markets, with concerns that such actions could stifle global economic activity and fuel inflationary pressures. Investors, in turn, have turned to gold, traditionally viewed as the ultimate store of value during times of economic and political instability.
The growing fears of stagflation—a combination of slow economic growth and high inflation—have also added to the demand for gold. As U.S. Treasury bond yields and the U.S. dollar (USD) weaken under the weight of these fears, gold has surged to new heights.
Market Sentiment and Potential Correction
While the gold rally remains robust, there is growing speculation about a potential correction. Traders may opt for profit-taking ahead of the tariff announcements on April 2, which could limit the upside potential.
From a technical perspective, gold’s Relative Strength Index (RSI) has entered an overbought zone, currently nearing 76, suggesting that the precious metal might face downward pressure if the uptrend cannot be sustained.
Nonetheless, the gold price remains on a record-setting trajectory, with its appeal as a safe-haven asset likely to continue driving demand amid rising geopolitical and economic risks. Investors will be closely watching the tariff announcements and the broader market response in the coming days.
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