[Christian Harris]

President Donald Trump’s recent tariff announcements have sent shockwaves through the global markets, causing significant volatility in gold prices.

As of February 8, 2025, gold prices have surged to unprecedented levels, with spot gold reaching $2,816.53 per ounce, briefly touching an all-time high of $2,818.581.

This dramatic increase is largely attributed to investors seeking safe-haven assets amid escalating trade tensions and economic uncertainty

Trump’s decision to impose/delay 25% tariffs on Canadian and Mexican imports, along with a 10% levy on Chinese goods, has intensified fears of a trade war that could potentially slow global growth and increase inflation.

These concerns have prompted a flight to safety, with gold being a traditional beneficiary during times of economic and geopolitical instability.

However, the relationship between tariffs and gold prices is not as straightforward as it might seem.

Historical data suggests that gold has actually performed better when tariffs have been lower.

This counterintuitive trend challenges the increasingly widespread narrative that higher tariffs are inherently bullish for gold.

The current surge in gold prices may be attributed to a combination of factors beyond just tariffs, including a weakening US dollar, declining Treasury yields, and ongoing economic uncertainties.

Additionally, the Federal Reserve’s decision to maintain interest rates, despite slowing economic growth, has further bolstered gold’s appeal to investors.

The impact of Trump’s tariffs on gold prices is also evident in the physical gold market.

Traders are rushing to move gold into the US before new trade barriers take effect, causing a significant tightening of supply in other major financial hubs like London.

This has led to a widening gap between New York futures and London spot bullion prices, reaching $40 per Troy ounce for the CME derivatives exchange’s most-active Comex gold contract.

As the situation continues to evolve, market analysts are closely watching for potential retaliatory measures from affected countries and the broader implications for global trade.

The uncertainty surrounding these tariffs and their potential economic impact is likely to keep gold prices volatile in the near term, with some experts predicting continued upward pressure on prices.

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