Gold prices extended two-month highs during Wednesday's Asian session, continuing a three-day rally and trading 1.4% away from all-time highs as investors turned to safe-haven assets amidst renewed trade tensions and inflationary concerns.
By 3:25 pm AEDT (4:25 am GMT), spot gold was up by $6.33, or 0.2% to US$2,751.25 per ounce.
The upward momentum followed United States President Donald Trump’s announcement of potential new tariffs. Trump proposed a 10% tariff on Chinese goods, citing issues related to fentanyl sales, effective from 1 February. Additionally, he hinted at imposing tariffs on the European Union.
The escalating trade war fears triggered risk aversion, driving investors toward safe-haven assets like gold and the U.S. dollar. Chinese Vice Premier Ding Xuexiang responded to the tariff threats at the World Economic Forum in Davos, stating, “There are no winners in a trade war.”
However, market participants remain cautious about the sustainability of the rally. While gold benefits from heightened market uncertainty, any recovery in risk sentiment or U.S. Treasury yields could temper its gains.