Gold prices rose in European trade on Monday and expanded the gains for the third straight session, trading above $3200 an ounce for the first time ever and heading for the biggest weekly profit this year on haven demand as the US-China trade war erupts.
The huge gains are boosted by the dollar’s tumble against major rivals, due to concerns about a potential US recession this year.
The Price
Gold prices rose 1.4% today to $3220 an ounce, a record high, with a session-low at $3175.
On Thursday, gold rose 3.1%, the second profit in a row, marking a fresh record high.
Weekly Trades
Gold prices are up 6% so far this week on track for the biggest weekly profit in 2025.
The Trade War
US President Donald Trump escalated the devastating trade war with China by announcing 145% tariffs on Chinese products.
The tariffs will be immediate and are a response to China’s disrespect to global markets as Trump described it.
Simultaneously, Trump announced a 90-day hold on tariffs for most other countries .
The Chinese government announced fresh retaliatory 84% tariffs on US products, deepening the trade war.
Investors are still concerned about the trade escalation between the US and China in particular, and from any potential recession due to the trade war, in turn impacting demand.
US Dollar
The dollar index tumbled 1.2% on Friday on track for the second loss in a row, plumbing a 21-month trough at 99.71 against a basket of major rivals.
A weaker dollar makes the greenback-denominated futures cheaper to holders of other currencies.
The huge losses come as investors lose confidence in US assets and flee the American stock and bond markets towards safe havens such as the Swiss franc and gold.
Fed Minutes
The latest Federal Reserve’s meeting minutes showed that members are all concerned about inflation and lower growth risks due to the tariff war.
Chicago Fed President Austin Goolsbey said on Monday that while corporations are concerned about tariffs, the Fed needs to look at actual data before responding.
Recent data showed US consumer prices slowed down more than expected in March, reducing inflationary pressures on the Federal Reserve.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May rose from 15% to 35%, while the odds of a June rate cut rallied to 91%.
SPDR
Gold holdings at the SPDR Gold Trust rose 12.62 tons yesterday, the biggest increase since March 21 highs, to a total of 949.71 tons, the highest since September 2022.
