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Gold prices rise as Trump's new tariffs on the auto industry stoke trade tensions

Gold prices reached their highest level in almost a week after U.S. president Donald Trump announced that new tariffs would be imposed on auto imports beginning next week. This announcement exacerbated global trade tensions, which have driven demand for safe-haven gold.

As of 0940 GMT the spot gold price was up 0.6% to $3,035.98 per ounce, after hitting its highest level since March 21 during earlier sessions. U.S. Gold Futures rose 0.8% to $3.045.

Gold, which is traditionally seen as an investment against inflation and uncertainty, has increased by more than 15 percent this year, reaching a record high of $3,057.21 in March.

Nitesh Sha, commodities strategist with WisdomTree said that the U.S. policymaking is creating a lot of uncertainty. Gold, as a defensive and anti-fragile investment, has risen largely because of these uncertainties.

Trump announced a 25% import tariff on cars and light trucks on Wednesday. The tariff is set to go into effect the next day, after which he will announce reciprocal tariffs against the countries that are responsible for most of the U.S. Trade Deficit.

The Federal Reserve's preferred measure of inflation, personal consumption expenditures, will be released on Friday to provide more clarity about the path that the U.S. Central Bank is likely to take in terms of rate cuts.

The Fed kept its benchmark rate unchanged last week, but it indicated that rates could be cut later this year. In a low-interest-rate environment, non-yielding gold tends to flourish.

In a recent note, ANZ analysts stated that they maintain their bullish stance towards gold. However, a consolidation could occur after the recent rapid rally to $3,040/oz.

Goldman Sachs on Wednesday raised its end-2025 gold price forecast to $3,300 per ounce from $3,100, citing stronger-than-expected ETF inflows and sustained central bank demand.

Silver spot remained at $33.68 per ounce. Platinum fell by 0.2% to $973.20, and palladium lost 0.1% to $967.08. (Reporting and editing by Jan Harvey in Bengaluru, Rahul Paswan from Bengaluru)

(source: Reuters)