Gold price surges to a new all-time high on trade tensions
Gold price surges to a new all-time high above $3,240 amid escalating US-China trade tensions
- Gold holds firm as a weakening US Dollar boosts its appeal to foreign currency holders.
- The metal gains further support from softer US inflation data, reinforcing expectations of Fed rate cuts by June.
- Meanwhile, the Dollar remains under pressure amid escalating US-China trade tensions.
Gold prices (XAU/USD) surged to a new all-time high of $3,240 during U.S. trading on Friday, fueled by escalating tensions in the US-China trade conflict, before pulling back to around the $3,220 level.
The US Dollar (USD) experienced broad-based weakness as markets reacted to China’s latest retaliatory move. On Friday, Beijing announced it would raise tariffs on U.S. goods to 125% starting Saturday, up from the previously planned 84%.
At the same time, fresh U.S. economic data revealed a slowdown in annual producer inflation. The Producer Price Index (PPI) rose by 2.7% in March, easing from February’s 3.2% increase.
On Thursday, the U.S. significantly escalated its trade measures against China by introducing a new 125% tariff on Chinese imports, added to an existing 20% duty—bringing the total tariff burden to 145%. This aggressive action overshadowed President Donald Trump’s decision to postpone higher tariffs on other nations by 90 days, intensifying concerns about wider economic fallout.
Gold’s upward momentum was further bolstered by weaker-than-expected U.S. inflation figures for March, which have sparked growing expectations of potential Federal Reserve rate cuts as soon as June. Markets are now factoring in the likelihood of up to a full percentage point in rate reductions by the end of the year. The Consumer Price Index (CPI) revealed headline inflation slowed to 2.4% year-over-year, below the projected 2.6% and down from February’s 2.8%. Core CPI—which excludes food and energy—rose 2.8%, also missing estimates. Every month, headline CPI declined 0.1%, while core CPI inched up 0.1%.
