Gold prices soared to unprecedented levels on Monday as financial markets reeled from U.S. President Donald Trump’s announcement of new trade tariffs. Investors, fearing economic instability, turned to gold as a safe-haven asset, driving its price above $2,828 per ounce. The rally was not limited to the U.S.—gold also hit all-time highs in euros, Japanese yen, British pounds, and Indian rupees, underscoring the widespread investor flight to safety.
The surge in gold prices was triggered by Trump’s confirmation that, starting Tuesday, the U.S. would impose significant tariffs on its largest trading partners. Imports from Canada and Mexico will face a 25% tariff, while Chinese goods will be hit with a 10% levy. Trump also hinted at extending tariffs to the European Union, accusing it of unfair trade practices and failing to buy enough American products.
The stock market responded with sharp declines. The S&P 500 fell 1.8% in the first hour of trading, while the EuroStoxx 600 lost 1.3%. Canada’s TSX index dropped 2.6%, and the Canadian dollar plummeted to its lowest exchange rate against the U.S. dollar since 2003. As uncertainty spread, gold prices in euros spiked to €2,760 per ounce, marking a 1.7% increase from Friday’s record.
Gold has historically been a go-to investment during economic turmoil. When financial markets become volatile, investors seek assets that retain value. Unlike stocks and currencies, which are susceptible to economic policies and trade wars, gold is a tangible store of value.
“Gold is behaving exactly as expected during a crisis,” said Bruce Ikemizu, head of the Japan Bullion Market Association. “Investors are piling into it as uncertainty grows, pushing prices to historic highs.”
Another unique development in the gold market was a large-scale movement of gold bullion from London to Comex-approved U.S. warehouses. Market analysts questioned whether traders would take physical delivery of gold at such high premiums, as it could result in immediate losses of $30 to $40 per ounce.
“This has never happened in my 37 years in the bullion market,” Ikemizu remarked. The unusual gold movements suggest hedge funds and institutional investors are aggressively positioning themselves for continued economic uncertainty.
The trade war escalated further as U.S. trading partners retaliated. Canada imposed 25% tariffs on C$155 billion worth of U.S. goods. Mexico and China also vowed countermeasures, though China delayed specific announcements due to the Lunar New Year holiday.
The economic impact of these tariffs is expected to be significant. According to Morgan Stanley’s Public Policy Research Team, the tariffs could:
- Push Mexico into a recession.
- Increase U.S. inflation by 0.3% to 0.6% over the next three months.
- Reduce U.S. economic growth by 0.7% to 1.1% over the next year.
Despite gold’s historic surge, silver prices failed to regain their recent highs. While silver often follows gold’s movements, it remains more closely tied to industrial demand, which could be affected by weaker global manufacturing due to trade disputes.
As trade tensions escalate and stock markets struggle, investors are likely to continue seeking refuge in gold. Analysts predict further gains if global uncertainty persists, reinforcing gold’s status as the ultimate hedge against economic instability.
With economic consequences still unfolding, all eyes remain on Trump’s next moves, market reactions, and central bank policies in the coming weeks. For now, gold remains the biggest winner in this high-stakes trade war.
The ongoing tailwinds in the gold markets are likely to make entities like Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) better positioned to deliver enhanced shareholder value.
NOTE TO INVESTORS: The latest news and updates relating to Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are available in the company’s newsroom at http://ibn.fm/ELRRF
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