The surge has been attributed to tariff exchanges between the US and China, and investor fears of a global trade war
Gold prices surged to a historic high on Wednesday, extending a record rally as investors concerned about a global trade war have sought safe-haven assets amid US-China trade tensions.
Gold rose 1%, with spot gold reaching $2,858.12 per ounce before settling at $2,855.32, marking a 0.5% increase for the day. US gold futures were also up, closing at $2,884.60, up 0.3%.
Analysts attributed the surge to escalating trade tensions between the US and China. On Tuesday, US President Donald Trump’s additional 10% tariffs on all Chinese imports went into effect. Beijing responded with restrictions on certain US imports, including a 15% tariff on US coal and liquefied natural gas (LNG), and a 10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks, effective February 10. It also signaled potential sanctions against companies such as Google.
Trump reportedly indicated that he is in no hurry to engage in discussions with Chinese President Xi Jinping to alleviate the situation.
“The potential economic consequences of a trade war between the U.S. and China are causing investors to fear a global recession and rising inflation,” Dominik Sperzel, the head of trading at Heraeus Metals Germany, told Reuters.
Gold prices have jumped more than 8% this year on fears of a global trade war, setting record highs. In London, the cost of short-term gold borrowing has surged due to a shortage in the city’s trading markets.
Experts have linked the shortage to a significant movement of gold to the US, where inventories on the New York Comex, a major commodities exchange, have soared by 88% since the presidential election in November 2024. Traders have ramped up shipments to the US in anticipation of the impact of Trump’s tariffs.
“Gold is overbought and needs to correct,” StoneX analyst Rhona O’Connell told the outlet, adding: “there is still scope for further upside, but barring any black swans we still expect to see the price topping out this year.”
The World Gold Council said in a report on Wednesday that global gold demand rose 1% to a record 4,974.5 metric tons in 2024, driven by higher investment and increased central bank purchases in the fourth quarter.
