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Gold reaches record highs as Trump tariff fears mount

Gold reaches record highs as Trump tariff fears mount

The gold price hit a new record on Friday, and was set to gain for the fifth consecutive week, as investors sought out the metal for its safe haven value due to increased U.S. trade concerns.

As of 0216 GMT spot gold was up 0.1% to $2,797.48 an ounce. This represents a 1% increase for the week. Prices reached an all-time peak of $2,799.71 earlier in the session.

Donald Trump announced on Thursday that the United States will impose a 25 percent tariff on imports coming from Mexico and Canada. He repeated his warning to both countries.

Gold is a good investment in times of geopolitical or economic turmoil. It also tends to do well when interest rates are low.

"Repeated threats of tariffs have fueled safe-haven flows to gold... Any downside surprise in inflation could suggest greater flexibility for the Fed and potentially bring forward expectations for rate cuts, providing further support for Gold," IG Market Strategist Yeap Jun Rong stated.

Further clues about the future of interest rates will be sought from the December U.S. Personal Consumption Expenditures (PCE) Report, which is due at 1330 GMT.

Jerome Powell, the chair of the Federal Reserve, said that inflation and job data will determine when another rate cut is to come.

In response to concerns over Trump's tariff plans 12.9 million troy-ounces of gold were delivered to COMEX approved warehouses Since late November, stocks have increased by 73.5%, to 30.4 millions ounces, their highest level since July 2022.

Gold prices may rise to new heights if tariff threats become more than just a concept for bargaining. Tim Waterer is the chief market analyst of KCM Trade.

Spot silver fell by 0.7%, to $31.45 an ounce. Platinum remained at $967.22 and palladium dropped 0.5%, to $983.92.

Silver and platinum are expected to gain in value this week, while palladium is set to lose.

(source: Reuters)