Gold Prices Surge to Record Highs Amid US-China Trade Tensions

Gold prices have surged for the third consecutive day, reaching a new high of over $3,200 an ounce. This increase is fueled by a weakening dollar and escalating trade tensions between the United States and China, which have heightened the allure of this safe-haven asset.

As of 10:40 a.m. ET, spot gold was trading up 1.6% at $3,225.52 per ounce, having hit an all-time peak of $3,244.10 earlier in the session. Meanwhile, US gold futures climbed 2.1%, reaching $3,245.60 per ounce in New York.

Over the past three days, gold has appreciated nearly 8%, reinforcing its status as a safe-haven investment during a time of significant market volatility. This volatility has been exacerbated by US President Donald Trump’s unpredictable tariff policies, prompting sharp selloffs in US stocks, bonds, and the dollar.

The rally continued following China’s decision to increase its tariffs on US imports to 125%, escalating the ongoing tensions between the world’s two largest economies.

“Gold is the best place to be in the market now,” stated Liu Yuxuan, a Shanghai-based precious metal researcher. “The unprecedented trade tension has deepened distrust in the US dollar, intensifying demand for other safe assets.”

The US dollar index has been on a downward trend, even hitting a three-year low at one point on Friday.

Expectations that the US Federal Reserve will lower interest rates are also buoying gold prices. Recent data indicated that US inflation has cooled broadly; however, tariffs could reverse this trend in the coming months. Traders are anticipating three interest-rate cuts for the remainder of the year, with the possibility of a fourth.

“A minor correction in gold prices wouldn’t be unexpected, but the general outlook remains positive as consumer and producer price indices provide the Fed more flexibility to reduce rates,” said Tai Wong, an independent metals trader.

However, analysts from UBS noted that certain factors could limit gold’s ascent, such as a cooling of geopolitical tensions, a move towards more cooperative trade relations, or a significant improvement in the US economic and fiscal landscape.

This year alone, gold prices have risen by over 20%, driven by central bank demand, expectations of US rate cuts, and ongoing geopolitical uncertainties that have pushed the metal to record levels.

(With files from Bloomberg and Reuters)