Gold hits record high as Trump tariffs spur safe-haven buying

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FILE PHOTO: FILE PHOTO: A woman holds a gold ornament at a jewellery shop in the old quarters of Delhi, India, May 24, 2023. REUTERS/Anushree Fadnavis/File Photo/File Photo

By Anmol Choubey

(Reuters) – Gold prices hit an all-time high on Monday, bolstered by safe-haven inflows after U.S. President Donald Trump’s tariffs on Canada, China and Mexico added to concerns of inflation that would dent economic growth.

Spot gold rose 0.6% to $2,816.53 per ounce by 09:38 a.m. ET (1438 GMT), after hitting a record of $2,818.58 earlier in the session.

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U.S. gold futures rose 0.7% to $2,855.90, trading at a higher premium to spot rates.

“It’s the implications of the tariffs… a lot of people believe that this could raise inflation upwards and also impact economic growth because of the higher costs involved with that and tariffs leaving a stagflationary type environment,” said Phillip Streible, chief market strategist at Blue Line Futures.

The 25% tariffs imposed by Trump on Canadian and Mexican imports from Tuesday, along with a 10% charge on Chinese goods, fuelled fears of a trade war that could slow global growth and feed inflation.

Canada and Mexico ordered retaliatory measures while China said it would challenge the tariffs at the World Trade Organization and take unspecified countermeasures.

The market is not fully convinced about the extent of the trade war, Bart Melek, head of commodity strategies at TD Securities, said.

“We haven’t seen a complete response from gold and if this trade war continues for a considerable period, it could lead to significantly higher gold prices down the road,” Melek added.

Gold, is often considered as a safe-haven investment during periods of economic or geopolitical instability.

J.P. Morgan said bearish contagion from equities could weigh on gold in the near term, but disruptive tariffs were a medium-term bull case for bullion.

Investors await data this week on U.S. job openings, the ADP employment report and the U.S. employment report to gauge the health of the U.S. economy.

Spot silver rose by 0.1% to $31.33 an ounce, platinum lost 2.2% to $956.45 and palladium was fell 0.3% to $1,005.25.

(Reporting by Anmol Choubey in Bengaluru; editing by Barbara Lewis)