Gold Surges Amid Intensifying Global Trade Tensions

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Gold prices surged to an unprecedented high on Thursday, while equity markets and crude oil declined amid escalating global trade tensions. Risk-off sentiment dominated financial markets due to economic and political uncertainties.

Gold futures at Comex jumped 1.5%, briefly crossing the $3,000 (2,764) per ounce threshold for the first time in history. Spot gold prices climbed 1.9% to $2,988 (2,752) per ounce, marking another all-time record. The precious metal has appreciated over 13% this year, driven by risk aversion, a weakening US dollar, and increased central bank purchases.

Haven demand intensified as economic and political uncertainties surrounding trade conflicts grew. US President Donald Trump’s aggressive tariff policies, including 25% levies on steel and aluminum imports and threatened 200% tariffs on EU alcoholic beverages, have triggered international retaliation. These escalating trade barriers potentially threaten global economic growth and may fuel inflation.

The deepening trade conflict could create stagflationary conditionshistorically favorable for gold as a store of value. A weakened US Dollar Index, which has declined over 5% since mid-January, and expectations of a potential Federal Reserve rate cut have further bolstered gold’s rally.

Recent inflation data has reinforced market expectations for a June rate cut, potentially weakening the dollar against other G10 currencies. Central banks are increasingly diversifying reserves, reducing US Treasury holdings while accumulating gold amid concerns about US fiscal policies and debt serviceability.

“Trump’s trade and tax policies are driving flows into gold as central banks seek to shift reserves,” noted Kyle Rodda, a senior market analyst at Compital.com.

Investors have rotated from riskier assets like equities and energy toward defensive investments. The S&P 500 entered correction territory, falling 10% from its February peak. European markets are expected to experience similar downward pressure.

Crude oil prices remain near multi-year lows, with benchmark futures like West Texas Intermediate and Brent declining 7-8% this year, reflecting deteriorating demand expectations and potential market shifts.

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