Raised gold bars and a silver bar | Photo credit: Wydyynd
While the president of the United States, Donald Trump, increased his tariff war against the world, gold continued rising to closing to reach a succession of maximum records.
The precious metal reached a new peak or $ 3,245.28 per ounce on April 11 and has risen 28 percent since it reached a minimum of $ 2,536.71 on November 14, shortly after Trump’s victory that saw his house in his house.
Somehow gold, operation is exactly as it should.
He is offering investors a safe chaos shelter that has wrapped many financial markets from Trump’s “Day of Liberation Day” Challenges on April 2.
The imposition of massive tariffs on most American business partners, with the false statement that reciprocally sent actions, bonds and some products in reverse.
Trump’s subsequent 90 -day rise in rates to a base or 10 percent in each country, separated from now 145 percent imposed in China, has failed to calm the nerves largely and provide the stability that financial markets generally yearn for financial markets.
Uncertainty has also led some serious questions about the role of the United States Treasury bonds as the last safe refuge asset, and investors question whether Trump’s tariffs are being undermined by Trump’s tariffs.
Treasury yields at 10 years of reference US registered its largest weekly increase in more than two decades last week, ending 4,478 percent on April 11, 8.6 basic points.
The nerves on the role of the US dollar such as the global reserve currency and the United States Treasury bonds as the safest port are undoubtedly positive for gold.
Hostage of gold
The problem for gold is that it is so hostage of the erratic and inconsistent commercial and inconsistent policies of Trump as any other asset.
If Trump continues his commercial war against China, and increases the 10 percent base tariffs in other countries after his 90 -day pause, then gold is likely to continue.
But if a commitment to Beijing is resolved that allows both parties to save the face, and other countries reach agreements with Trump that largely preserve global trade, then the case of gold seems less safe.
The dilemma is to solve what is the probable trajectory of Trump’s tariff war is, in the best case, a riddle game.
Perhaps the safest assumption is that when the dust sits, the United States is likely to have the highest average tariffs in imports since the 1930s.
This is likely to rinse economic growth and accelerate inflation, but perhaps more in the United States than worldwide.
In this case, it continuously meets, since several investment banks now predict, an example is Goldman Sachs raising its objective from 2025 to $ 3,700 per Ounty on April 11.
Or the fear of the rise in commerce and the most traditional promoters of the purchase of the Central Bank and the physical demand in China and India play again?
Chinese cousin
Certainly, it is likely that a departure from the United States Treasury bonds drives gold purchases, especially in China, the world’s main gold buyer.
Chinese consumer demand can also maintain the uncertainty given about the perspectives of the shares, and this dynamic is reflected in the growing premium for spot purchases
But unlike China, it is likely that high gold prices scrub the demand of consumers in India, the second largest buyer of precious metal.
There are already some consumer stress signs in India, with the discount to buy gold
Sprot has recovered at a discount of $ 11 per ounce on April 11, but even this level is still well below the $ 16 premium since November. 15, shortly after Trump’s victory.
If the general gold demand is considered a three -legged investor demand stool, the purchase of the Central Bank and the purchases of consumers of China and India, currently the three legs are currently supported.
With the exception of the demand of India, all legs are also bees of bees for Trump’s policies, which means that although gold works as a safe port, it is likely that it is subject to the same volatility as other assets.
The opinions expressed here are those of the author, Clyde Russell, columnist of Reuters.
Posted on April 14, 2025