Gold Breaks Records: Due to Trade War, Price Per Ounce Exceeds $3,000

The price of gold on Friday surpassed the psychological and record level of three thousand dollars per ounce, driven by uncertainty surrounding the further developments of the trade war initiated by U.S. President Donald Trump, as well as increased expectations that the U.S. central bank will initiate a new cycle of looser monetary policy. On Friday morning, gold was trading at $3,008, which is 0.6 percent higher than the previous day. The prices of other precious metals also rose. The value of silver strengthened by 2.4 percent, to just under $35, while palladium was trading at $973.50, which is one percent higher. Platinum increased by 0.7 percent, to $1,012.

Thus, gold is on track for its price to rise for the second consecutive week, by about three percent. As foreign analysts for CNBC point out, the rise in the price of gold reflects investors’ expectations that trade tensions are likely to become even ‘more heated’ before any easing occurs. To protect themselves from the significant volatility currently prevailing in financial markets, investors are turning to safer forms of assets, and gold has always held such a status.

The U.S. President has opened several trade fronts, from Canada, through Mexico to China. The latest in the series is the European Union, to which he imposed tariffs on aluminum and steel. Following the European response, which will, among other things, impose a 50 percent tariff on American whiskey, Trump announced that the U.S. will impose a 200 percent tariff on alcoholic beverages from Europe. According to analysts, reciprocal tariffs will show their effect on prices, and thus inflation, in the second quarter.

Financial markets are eagerly awaiting the meeting of the U.S. central bank (Fed) scheduled for next Wednesday. According to expectations, the Fed will maintain key interest rates in the current range of 4.25 to 4.50 percent. However, investors are waiting to see what the leaders will communicate regarding the possibility of future rate cuts and how that will unfold.