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Gold reaches record high after Trump's latest tariffs

Gold and global stocks hit record highs on Thursday, following the announcement of new tariffs by the Trump administration in the United States that extended the trade war against auto imports.

Trump announced late Wednesday that he would impose 25% tariffs on imported vehicles and auto parts made abroad. The tariffs are scheduled to go into effect on April 3rd. The Nikkei 225 and KOSPI in South Korea were affected by this.

Many countries around the world threatened to impose retaliatory taxes.

U.S. stock prices fluctuated between gains, losses and a decline in automakers. However, electric vehicle manufacturers Tesla and Rivian rose as their entire production is located in the U.S.

Ford and General Motors both lost 3%. This was due to concerns over the impact of their supply chains. Stellantis' shares listed in the United States fell by about 1%.

The pendulum is swinging in the markets right now. They react to announcements with the worst possible expression, but then they slowly realize that the situation might not be quite as bad as thought, or even as stated, because it could be part of a larger negotiation, said Eric Theoret. FX strategist, Scotiabank, Toronto.

The Dow Jones Industrial Average dropped 120.77 points or 0.28% to 42,333.38. The S&P 500 declined 9.03 points or 0.17% to 5,702.48. And the Nasdaq Composite lost 41.37 points or 0.23% to 17,857.20.

European stocks ended lower on Friday, as shares of Europe's largest carmakers fell. Volkswagen fell 1.26%; BMW dropped 2.55%, and Mercedes-Benz fell 2.69%.

The MSCI index of global stocks fell by 1.77 points or 0.21% to 844.15.

The pan-European STOXX 600 fell by 0.44%, to 546.31, which is a new two-week low.

In recent weeks, the stock market has been impacted by tariffs, their impact on global economic growth, and their potential to delay Federal Reserve interest rate cuts. However, they have recently shown signs of stabilizing.

Spot gold, reflecting investors' caution was higher by 1.19% at $3,055.33, after reaching a record high of $3,059.30.

Goldman Sachs raised its gold price forecast on Wednesday to $3,300, citing stronger-than-expected exchange-traded fund inflows and sustained central bank demand.

The dollar index (which measures the greenback in relation to a basket of currencies) fell 0.35%, while the euro rose 0.42%, reaching $1.0797.

The Mexican peso fell 0.98% against the dollar to 20.324, while the Canadian Dollar slid 0.29% to C$1.43, as both countries will be severely affected by the auto tariffs.

Trump announced that he plans to impose reciprocal duties on all countries starting April 2.

The U.S. labor market is still on solid ground, despite the Trump tariff policy and aggressive cuts of federal employees by Elon Musk’s Department of Government Efficiency.

Other data revealed that the economy grew slightly faster than originally estimated in the fourth quarter.

The yield on the benchmark 10-year Treasury bill in the United States increased by 2.5 basis points, to 4.363%. The yield on the seven year note increased after a soft sale of $44 billion worth of paper.

Brent crude closed at $74.03 a barrel, up by 0.33% for the day as investors assessed the implications of the latest escalation of the trade war.

(source: Reuters)