Gold prices skyrocketed as investors chew over the likelihood of United States (U.S) interest rate cuts and heightening trade tensions under President Donald Trump’s tariff policies.
Several factors coincided to increase the prices of gold. It includes:
Two federal reserve officials recently proposed that they’re open to lowering interest rates. This decision makes gold more attractive as there’s no interest on gold unlike saving accounts or bonds.
U.S. President Donald Trump’s push for new tariffs on imports can possibly drive inflation keeping some Fed officials cautious. Under these uncertain circumstances, gold is considered as a safe haven.
Moreover, Trump's criticism of Fed Chair Jerome Powell over high rates is reportedly considering replacements who could cut rates faster, adding to market uncertainty.
On the trade front, representatives of European Union officials are set to conduct meetings on the U.S. tariffs agenda to a possible no-deal scenario with the US.
Investors have their eyes on progress talks with a raft of trade partners ahead of Trump’s August 1 deadline for imposing alleged reciprocal tariffs. The price of Gold has surged more than a quarter this year with rising geopolitical tension and concerns related to dollar-denominated assets.
As of now:
Thus, gold is rising because investors expect lower interest rates and are nervous about trade wars. If the Fed cuts rates or trade tensions escalate, gold could keep climbing.
