Gold prices slightly retreated on Monday after hitting a record high of $3,245 per ounce during Asian trading, as the escalating US-China trade war continues to fuel strong demand for the safe-haven metal.
The People’s Bank of China (PBOC) allocated additional gold import quotas to several commercial banks in response to rising demand from institutional and retail investors seeking a safe haven amid the trade conflict. This comes as Chinese gold prices reached a third consecutive daily record, with the Shanghai Gold Exchange (SGE) fixing its benchmark at ¥762 per gram ($3,247 per ounce), marking a premium of $16 over London prices.
According to traders, China has been consistently purchasing gold throughout the past week, driven by tariff uncertainties and yuan depreciation. This surge in demand has helped push gold prices to an all-time high. Trading volumes on the SGE increased nearly 70% in April compared to the previous month, the highest since the height of the Covid-19 crisis in 2020. Similarly, derivatives trading on the Shanghai Futures Exchange (SHFE) saw a 55% increase.
Despite the strong demand from China, gold prices fell 0.4% to $3,223 per ounce on Monday after reaching the record high. Nevertheless, gold continues to perform well, marking its 23rd all-time high this year. The metal gained 5.8% over the past week, its best performance since March 2024, driven by geopolitical tensions and uncertainty.
The market remains cautious despite US President Donald Trump’s recent temporary pause on reciprocal tariffs. Trump has also indicated that new tariffs on specific goods, including semiconductors, will be announced in the near future. Meanwhile, China retaliated by raising tariffs on US goods to 125%, further escalating trade tensions.
In the broader financial market, European stocks rose while US stocks saw gains, driven by positive market sentiment following Trump’s tariff pause. However, gold’s continued upward movement reflects growing concerns over the US economy and shifting investor preferences. Several major financial institutions, including Goldman Sachs, have raised their gold price forecasts, with estimates reaching as high as $3,700 per ounce by year-end.
Silver prices also saw a rebound, recovering from an earlier drop to $31.30 per ounce, as the market adjusted to ongoing uncertainties. The overall sentiment remains that gold is benefiting from heightened demand for safe-haven assets, with geopolitical and economic risks driving the market.
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