Gold prices surged to a historic high of $2,869.68 per ounce on Wednesday, driven by mounting investor demand for safe-haven assets amid renewed US-China trade tensions.
Spot gold rose 0.9% to $2,867.59 by 0906 GMT, while US gold futures climbed 0.7% to $2,895 per ounce.
The rally comes as China imposed retaliatory tariffs on US goods in response to new duties from Washington. US President Donald Trump signaled he is in no rush to engage with Chinese President Xi Jinping, prolonging fears of economic fallout from the trade dispute between the world’s two largest economies.
“The potential economic consequences of a trade war between the US and China are causing investors to fear a global recession and rising inflation,” said Dominik Sperzel, head of trading at Heraeus Metals Germany.
Federal Reserve officials have also expressed concerns that the trade tariffs may drive inflation, with one warning that the uncertainty warrants a cautious approach to future interest rate adjustments.
Investors have turned to gold as a hedge against rising inflation, though analysts note that its appeal could wane if interest rates increase. Rhona O’Connell, an analyst at StoneX, remarked that “gold is overbought and needs to correct” but added that “there is still scope for further upside barring any black swans.”
Gold’s relative strength index currently stands at 76, signaling that the precious metal has entered the “overbought” territory.
The World Gold Council reported a 1% increase in global gold demand in 2024, reaching a record 4,974.5 metric tons. This rise was fueled by higher investment and increased central bank purchases during the fourth quarter.
Other precious metals also saw gains, with spot silver rising 1.1% to $32.44 per ounce, platinum gaining 1.3% to $976.05, and palladium advancing 0.8% to $998.00.
