Gold bounces higher as trade turmoil hurts dollar, Treasurys
(Bloomberg) — Gold (GC=F) rose the most in nearly a year as global markets gyrated and the dollar weakened after US President Donald Trump risked a brutal global trade war with sweeping new import tariffs.
A vicious selloff of US government bonds — typically a safe haven in times of turmoil — underscored a jittery day for investors as Trump's historic trade measures came into effect. Bullion extended recent declines before swinging higher to gain as much as 2.3%
'Gold's rebound reflects growing investor anxiety over tariff threats and the potential reshaping of global trade norms,' said Christopher Wong, a foreign currency strategist at Oversea-Chinese Banking Corp. Bullion remains a good hedge against a more disorderly global economy, he said.
Trump placed higher duties on roughly 60 trading partners, with China facing a punitive tariff of 104% on its goods. Beijing held back from immediate retaliation, but promised countermeasures and reiterated that it's ready to 'fight to the end' in the face of escalating US trade measures.
Gold has enjoyed a powerful run — including a record high last week — but has been caught up the global selloff over the past week as the scale of Trump's trade shake-up was revealed. Even though bullion is a traditional haven, extreme market disruptions can prompt investors to sell the asset to cover losses elsewhere.
The precious metal is still seen having more upside, after a gain of nearly 30% over the past year on central bank buying and growing geopolitical tensions. There's also speculation that heightened volatility may prompt the Federal Reserve to speed up rate cuts to prevent a recession. Lower rates typically benefit gold, which doesn't pay interest.
Gold for immediate delivery was up 2.1% to $3,046.02 an ounce at 3:39 p.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.5%. Silver, palladium and platinum were up.
—With assistance from Jason Scott.
More stories like this are available on bloomberg.com
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