Gold Price Hits $3000 Amid Escalating Global Trade War
Gold prices hit a new high of $3000 per ounce for the first time. The record surges comes as demand surges amid the escalating global trade war.
The escalating trade war between the United States and many of its largest trading partners has worried financial markets.
Gold is seen as a typical haven asset, with its prices rising more than 13% this year. At the same time, the S&P 500 plummeted by 7%. In addition, the Dow Jones Industrial Average by 2%, and the Nasdaq by 8.5%.
The rush toward gold offers investors a hedge against uncertain stock performance.
Gold Price at $3000 as Demand Surges
Demand for safe-haven assets surged amid economic and political uncertainties surrounding the ongoing tit-for-tat tariffs and rising geopolitical tensions.
The global economic outlook has darkened due to escalating tit-for-tat tariff threats between the US and other countries. As a result, Gold prices hit the $3000 level.
President Trump levied a 25% tariff on steel and aluminium imports, triggering retaliatory measures from Canada and the European Union.
He also threatened to impose a 200% tariff on EU wine and other alcoholic beverages entering the United States. The threat is in a response to the bloc’s plan to tax American whiskey imports.
The US president has also raised levies on Chinese imports into the US to at least 20%.
The introduction of tariffs and taxes on businesses importing goods from overseas has fueled fears of price inflation. These growing concerns have pushed investors into gold.
When tariffs are levied on goods, businesses incur extra costs, which could be passed on to consumers through the price tags of the products sold, increasing the cost of living.
While the widening trade war is expected to fuel inflation, higher trade barriers and deglobalization could slow global economic growth. As a result, Gold prices hit $3000
Read: Gold Prices Hit An All-Time High of $2858.12 Per Ounce
Surging Gold Price Weakens the US Dollar
The gold price hit $3000 due to the weakened US dollar. The US Dollar Index, which measures the value of the US dollar relative to a basket of major foreign currencies, has declined more than 5% from its yearly high in mid-January.
Concerns about the US economy are likely to lead to lower interest rates.
The dollar may weaken against other G10 currencies as investor sentiment shifts. However, this trend may not continue if the Federal Reserve maintains a hawkish outlook, as escalating trade tensions could exacerbate inflationary pressures.
Meanwhile, amid optimism surrounding a potential fiscal policy shift within the European Union, the euro’s rally has also weighed on the US dollar, prompting investment flows away from US markets.
Central Banks May Shift Away From US Treasuries
Central banks have been increasing their gold reserves while reducing holdings of US government bonds.
According to the World Gold Council figures, central banks added 1,045 tons of gold to their reserves last year—the third year in a row more than 1,000 tons have been bought.
Trump’s tariffs and fiscal policies to reduce the government deficit have raised concerns about the US’s ability to service its debt.
Investors Move into Defensive Mode
As gold prices hit more than $3000, investment funds shift away from riskier assets, such as equities and energy, to gold amid mounting concerns about global economic growth.
Consequently, investors are withdrawing from US equity markets, particularly large-cap technology stocks, over the past month due to growth concerns.
The S&P 500, the benchmark US stock index, has entered correction territory for the year, falling 10% from its all-time high in February. European stock markets are also expected to end the week lower due to spillover effects from Wall Street. Also, Tech stocks, particularly the “Magnificent 7” firms, including big names like Apple and Tesla, have shed more than $1.5 trillion off their combined valuation since the start of 2025 after enjoying huge gains in 2024.
