Gold rose to an all-time high early Wednesday on concerns over the U.S. and China trade war. The two countries began tit-for-tat tariffs against each other’s products, spurring haven demand for the yellow metal.
U.S. President Donald Trump signed an executive order over the weekend imposing 10% tariffs on China. On Tuesday, the U.S. Postal Service said it was temporarily halting accepting packages from China and Hong Kong because the order ended duty-free handling of many of the parcels. Beijing has imposed tariffs on about 80 products, staring Feb. 10, announced actions against U.S. companies, and tightened export controls on certain minerals.
Adding to geopolitical uncertainty were comments Trump made Tuesday proposing that the U.S. take over the Gaza Strip.
April gold futures fell 0.4% Tuesday to $2,875.80 an ounce on Comex, though the most-active contract is up 1% this week. Bullion increased 7.4% last month after dropping 1.5% in December and losing 2.5% in November. The metal gained 27% in 2024, its biggest annual gain since 2010. The April contract is currently up $22.40 (+0.78%) an ounce to $2898.20 and the DG spot price is $2875.80.
Demand for gold hit another record high last year amid central bank purchases and investment demand growth, along with geopolitical and economic uncertainties, the World Gold Council said in its annual report released early Wednesday. Demand remains firm into 2025, it said.
Gold prices also advanced last year in anticipation of expected interest rate cuts in response to stabilizing inflation. Fed policymakers unanimously agreed last week to keep their benchmark interest rate at 4.25% to 4.50%.
It was the Fed’s first policy meeting since July without a rate cut. The Fed cut rates three times last year, reducing its benchmark interest rate in September, November and December. Previously, the Fed had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to combat inflation. High interest rates are considered bearish for gold, while low rates and rate cuts are bullish.
Most investors aren’t pricing in rate reduction until June, according to investors tracked by the CME FedWatch Tool. About 81.5% expect rates to remain unchanged in March, compared with 18.5% anticipating a 25 basis point cut.
Front-month silver futures dropped 0.7% Tuesday to $33.02 an ounce on Comex, though the most-active March contract increased 3.5% in the first two days of the week. Silver added 10% last month after dropping 6% in December and falling 5.1% in November. It gained 21% in 2024. The March contract is currently down $0.032 (-0.10%) an ounce to $32.990 and the DG spot price is $32.44
Spot palladium rallied 3.2% Tuesday to $1,008.00 an ounce and is up by the same amount this week. Palladium advanced 11% last month after falling 6.7% in December and sliding 12% in November. Palladium dropped 17% last year. Currently, the DG spot price is down $3.70 an ounce to $1009.00.
Spot platinum rallied 0.8% Tuesday to $977.80 an ounce and is up 3.9% so far this week. Platinum gained 8.4% in January after losing 4.6% in December and declining 4.2% in November. Platinum slid 8.4% in 2024. The DG spot price is currently up $7.40 an ounce to $991.80.
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