Gold rose to a record high as investors flocked to safety after US President Donald Trump reiterated threats to impose tariffs on Mexico and Canada.
Bullion briefly topped US$2,800 an ounce for the first time ever on Friday (Jan 31) after jumping 1.3 per cent on Thursday and blowing past the previous all-time peak set in October. The surge came after Trump said he would follow through on imposing 25 per cent levies on imports from Canada and Mexico on Feb 1. He also threatened China with tariffs, without specifying a level.
The precious metal, on track for its fifth consecutive weekly gain, has benefited from haven demand as Trump’s tariff threats spur fears of trade wars that could sap economic growth. There are also worries that his pledges to cut taxes and overhaul immigration may erode US finances and reignite inflation. Federal Reserve chair Jerome Powell said on Wednesday the US central bank was in a “wait-and-see” mode with regard to the potential impact of the new administration’s policies.
The Federal Open Market Committee left interest rates unchanged this week as expected – after cutting them at each of the three previous meetings since September – and indicated that stalled progress towards lower inflation warranted a patient approach.
Elsewhere, traders will be focused on the Fed’s favoured inflation gauge, the personal consumption expenditures index – due later on Friday. It’s expected to show a small acceleration in price hikes, according to the median forecast of economists surveyed by Bloomberg.
Spot gold rose 0.1 per cent to US$2,796.83 an ounce as of 8.08 am in London. The Bloomberg Dollar Spot Index added 0.1 per cent. Silver declined, while platinum and palladium were little changed. BLOOMBERG
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