Gold hits record as trade war, Powell fire up haven demand

KARACHI: Gold hit another all-time high as warnings from Federal Reserve Chief Jerome Powell about the impact of the trade war fuelled volatility on Wall Street, leading to sharp declines in stocks and the dollar.

Bullion rose as much as 0.4 per cent to $3,357.78 an ounce on Thursday, before paring gains. The metal added 3.5 per cent on Wednesday in its biggest one-day gain since March 2023, as the dollar fell to a fresh six-month low. Traders were again whiplashed by a slew of tariff headlines, while Powell quelled hopes the Fed would act quickly to soothe investors, highlighting the unpredictability of tariff announcements from Washington.

“We don’t know that yet, and until we know that we can’t make informed decisions.” said Powell when asked at the Economic Club of Chicago if the central bank would intervene to calm markets. His comments again showed officials are in no hurry to change the central bank’s benchmark policy rate.

Gold prices surged by Rs2,000 per tola on Thursday in the local market, tracking gains in the international market.

According to the All Pakistan Sarafa Gems and Jewellers Association, the price of gold reached Rs350,000 per tola, the highest level recorded in Pakistan’s history. Meanwhile, the price of 10-gram gold rose by Rs1,715, settling at Rs300,068.

In the international market, gold prices climbed by $19 per ounce, reaching $3,329. Typically, local gold prices in Pakistan include a premium of around $20 per ounce over international rates, accounting for import costs and domestic market factors.

Silver, however, moved in the opposite direction. Silver rates dropped by Rs59 to Rs3,401 per tola, while the price of 10-gram silver fell by Rs51 to Rs2,915.Bullion dealers and analysts in Pakistan attribute the continued rise in gold prices to a combination of geopolitical instability, inflationary pressures and growing investor interest in precious metals.

With central banks globally expanding their gold reserves and investors shifting away from riskier assets, the demand for gold has soared.

Market observers suggest that unless a major shift occurs in global economic policies or geopolitical tensions ease, the upward momentum in gold prices may persist in the near term. Meanwhile, US and Japan kicked off formal trade negotiations in a bid for the Asian powerhouse to avoid higher levies. While the talks didn’t result in an immediate halt on tariffs, Japan’s lead negotiator said the countries will speak again soon as they aim to reach a deal within the 90-day grace period. Trump hailed the talks as “big progress”.

The precious metal has climbed almost 28 per cent this year -- outpacing the 27 per cent gain it notched in 2024 -- as the escalating trade war creates anxiety over a possible global recession. Meanwhile, the Trump administration is preparing to pressure nations to curb trade with China in negotiations over US tariffs.

In return, China remains defiant. President Xi Jinping -- in the midst of a tour to Southeast Asia as he seeks to deter nations from cutting deals with the US at Beijing’s expense -- was cited by state media Xinhua News Agency as calling for joint opposition to hegemony, power politics, and camp confrontation.

“The big theme is uncertainty,” which is benefiting gold, said Nicholas Frappell, the global head of institutional market at ABC Refinery based in Sydney. “Uncertainty about the scale and breadth of tariffs, uncertainty over the strategic plan of the US administration, and the degree to which America’s trade partners will respond.”