Why Are Gold Prices Soaring Amid US President Trump’s Tariffs?

Fears of Trade Wars and Geopolitical Uncertainty Drive Gold to Record Highs

Gold prices have surged to historic levels in response to the latest tariffs imposed by US President Donald Trump, which have sparked concerns about global trade stability and inflationary pressures.

The yellow metal, long considered a safe haven during periods of economic uncertainty, has seen unprecedented demand.

On Monday, gold surpassed the $2,900 per ounce mark for the first time, extending gains on Tuesday to hit a new peak of $2,942.70 per ounce. As of 07:01 GMT, spot gold traded at $2,916.37 per ounce, reflecting a 0.3 percent rise.

What Triggered the Gold Rally?

Trump’s latest move involves reinstating and increasing tariffs on steel and aluminum imports, with rates now set at 25 percent.

This decision, aimed at bolstering American manufacturing, has sent ripples across global markets, depreciating several major currencies while simultaneously fueling demand for gold.

Historically, investors turn to gold during times of economic turbulence. Unlike fiat currencies, which can lose value due to inflation or central bank interventions, gold retains its purchasing power over time due to its scarcity and intrinsic value.

Historical Precedents of Gold Price Surges

The current gold rally is not an isolated event. Past crises have demonstrated similar trends:

• 2008 Financial Crisis: Gold surpassed $1,000 per ounce for the first time before skyrocketing to $1,900 in 2011 as the global economy reeled from the subprime mortgage collapse.

• Russia-Ukraine Conflict (2022): The onset of war pushed gold prices to $2,070 per ounce, as investors sought refuge from geopolitical instability.

With inflation concerns mounting due to trade disruptions, analysts predict gold could break the $3,300 per ounce threshold if tariffs continue to escalate.

How to Trade Gold in Today’s Market

For traders looking to capitalize on gold’s bullish trend, several strategies stand out:

1. Exchange-Traded Funds (ETFs)

Investing in gold-focused ETFs allows exposure to price movements without the need to hold physical bullion. Popular options include:

• SPDR Gold Shares (GLD) – Trading at $267.39.

• iShares Gold Trust (IAU) – Trading at $54.69.

2. Gold Mining Stocks

Gold mining companies often experience amplified gains when gold prices rise. Key stocks include:

• Barrick Gold Corporation (GOLD) – Trading at $17.07.

• Newmont Corporation (NEM) – Trading at $45.49.

3. Futures Contracts and CFD Trading

Gold futures allow traders to speculate on price movements with leverage. Given current geopolitical uncertainty, long positions in gold futures could yield significant gains.

Contracts for Difference (CFDs) offer another flexible way to trade gold. CFDs allow traders to profit from both rising and falling prices by taking long or short positions without owning the physical asset.

They provide leverage but also come with increased risk, making proper risk management essential.

Outlook: Will Gold Continue to Rise?

As global markets brace for the full impact of Trump’s tariffs, gold is poised to remain a preferred safe-haven asset. Factors such as ongoing trade disputes, inflation concerns, and central bank purchases indicate that gold’s bullish momentum could persist in the coming months.

Traders should stay vigilant, monitoring further economic developments and adjusting their strategies accordingly. As always, risk management is crucial, as market conditions can shift rapidly.

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