Key Takeaways
Global markets are on edge as trade tensions between the U.S. and China intensify, pushing investors toward safe-haven assets.
Gold, long viewed as a hedge against economic uncertainty, surged to a record high on Feb. 4 as new tariffs from Washington and retaliatory measures from Beijing deepened fears of a prolonged trade war.
With inflation concerns mounting and geopolitical uncertainty rising, analysts say gold’s rally may be far from over. Investors are shifting capital into the precious metal as a safeguard against potential economic fallout, with some predicting further gains if trade disputes persist.
President Donald Trump’s tariff announcements sent spot gold up 0.8% to $2,818.99 per ounce. The metal briefly touched $2,830.49 before U.S. gold futures settled at $2,857.10.
Despite a strong dollar, which typically weighs on gold, the uncertainty surrounding tariffs has fueled demand. Trump’s move to impose 25% tariffs on Canadian and Mexican imports and 10% tariffs on Chinese goods has set the stage for a prolonged economic standoff.
While the White House paused tariffs on Mexico and Canada after a last-minute agreement, analysts remain cautious. J.P. Morgan warned that short-term equity market strength might put pressure on gold, but trade disruptions create a medium-term bullish outlook for the metal.
“Gold rose to a new all-time high after President Donald Trump imposed tariffs on Canada, Mexico, and China, driving investors into safe havens,” said Warren Patterson and Ewa Manthey, commodity strategists at ING.
Despite headwinds from a stronger U.S. dollar, gold has remained resilient. Total known gold ETF holdings have surged by more than 590,000 ounces this year, now standing at 83.4 million ounces, according to ING.
“Even though tariffs on Canada and Mexico have been delayed, the uncertainty over trade and economic policy continues to support gold prices,” Patterson and Manthey added.
The demand isn’t just theoretical—bullion banks are actively moving gold to the U.S., where gold futures are trading at a premium. Investors see this as a sign of further price appreciation in the months ahead.
Beijing wasted no time responding to Trump’s trade offensive. On Tuesday, China imposed retaliatory tariffs, including:
The latest measures take effect on Feb. 10, and Oxford Economics warns that the trade war is still in its early stages. The firm has downgraded China’s growth outlook and predicted more tariffs on the horizon.
China also announced a probe into Google’s market dominance and added two U.S. firms to its “unreliable entity list,” further escalating tensions.
Trump, meanwhile, has linked his tariffs to Beijing’s failure to curb fentanyl exports. China dismissed the claim, calling it America’s problem.
Beijing’s move to restrict exports of key materials—used in energy, defense, and tech industries—could have far-reaching consequences.
With China controlling much of the world’s supply of rare earth metals, its trade war countermeasures could disrupt global production lines, particularly in the technology and renewable energy sectors.
With both sides digging in, analysts say gold’s record-breaking rally may only be getting started.