Trump’s Remarks on China Tariffs Push Gold Prices Close to Historical Highs

特朗普发布中国关税言论,黄金价格接近历史高点
Published on: Jan 25, 2025
Author: Amy Liu

Following U.S. President Donald Trump’s hint at a more lenient approach towards China, gold prices are nearing historical highs, and the dollar is weakening.

Gold is trading around $2,780 per ounce, the highest level since last October. In a news interview aired on Thursday, Trump stated that he “would rather not use” tariffs against China. The dollar index dropped by as much as 0.7%, making gold cheaper for most buyers.

Gold prices have risen nearly 3% this week, mainly due to increased demand for safe-haven assets amid uncertainties about the global economic outlook. Joni Teves, a strategist at UBS Group, noted that despite a strengthening dollar, new U.S. tariffs would be favorable for gold. Investors are expected to overlook strong dollar performance. During times of volatility and macroeconomic uncertainty, gold will attract demand as a safe-haven asset and an option for portfolio diversification.

Since Trump’s inauguration, traders have been closely monitoring his comments on trade and tariffs. Trump has identified China, the European Union, Canada, and Mexico as potential targets for import tariffs, raising concerns about how other governments might respond. In a video on Thursday, Trump announced his intention to impose import tariffs on Europe to bring manufacturing back to the U.S.

The U.S. President also indicated that he would call for immediate interest rate cuts. While lower borrowing costs typically support precious metals, traders are cautious because monetary policy is solely determined by the Federal Reserve.

Last year, gold prices hit a series of records, propelled by the Fed’s shift to rate cuts, geopolitical tensions, and purchases by central banks. Traders are now also paying attention to Trump’s domestic agenda, including his pledges for tax cuts and immigration reform. These initiatives could reignite inflation, complicating the Fed’s path for interest rate cuts.

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