Gold Prices Reach Record High Amid Escalating U.S.-China Trade Tensions

Gold prices surged to an all-time high on Wednesday, driven by growing fears of a renewed trade war between the United States and China. The spike followed Beijing’s decision to impose tariffs on U.S. imports in retaliation for new U.S. duties on Chinese goods.

Spot gold rose 0.2% to $2,848.69 per ounce after briefly touching a record high of $2,853.97 earlier in the session. Meanwhile, U.S. gold futures gained 0.2% to $2,879.70.

Rising Trade Tensions Fuel Market Volatility

U.S. President Donald Trump indicated on Tuesday that he was in no rush to engage in discussions with Chinese President Xi Jinping to ease trade tensions between the world’s two largest economies.

China responded to the latest U.S. tariffs by implementing targeted levies on U.S. imports and placing several American companies, including Google, under scrutiny for potential sanctions.

Market Experts Predict Further Gold Price Surges

Analysts anticipate further gains in gold prices, with Ilya Spivak, head of global macro at Tastylive, suggesting that the next key milestone for gold could be $3,000 per ounce. He noted that if trade tensions escalate, China may be increasingly inclined to continue purchasing gold for its reserves.

Inflation Concerns and Federal Reserve Warnings

At the same time, the Trump administration’s tariff strategy has raised inflation concerns. On Monday, three Federal Reserve officials cautioned that trade-related uncertainty could increase inflation risks, with one policymaker advocating for a more cautious approach to interest rate cuts.

Although gold is traditionally viewed as a hedge against inflation, rising interest rates could weaken its attractiveness to investors.

Key Economic Data in Focus

Investors are closely monitoring upcoming U.S. economic data, particularly the ADP employment report and the payrolls report on Friday, both of which are expected to provide deeper insights into the health of the U.S. economy.

Meanwhile, Spivak observed that while gold demand could provide some support for other precious metals, their greater sensitivity to risk appetite has led to their underperformance in recent trading sessions.

With trade tensions mounting and inflation risks looming, gold’s strong performance highlights its enduring appeal as a safe-haven asset in uncertain economic times.

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