Gold has reached new record highs for the second consecutive day, touching $3,220 per ounce in spot trading on Friday.
Gold’s gains come amid the accelerating escalation of the trade war and growing uncertainty about its future course following conflicting decisions on tariffs and doubts surrounding Donald Trump’s strategy, in addition to existing concerns about the consequences of this war on the American and global economy.
The trade war has reached the point where China responded by raising tariffs on imports from the United States to 125% from 84%, following Trump’s increase to 145%. This mutual escalation further weakens hopes for a diplomatic settlement to the conflict.
Investors piling into gold on any retracements
Donald Trump’s 90-day waiver on tariffs on countries worldwide failed to calm market fears for long, as the trade dispute with China accelerated. Meanwhile, investors have turned to buying gold on the decline. Over the last two sessions, the largest physical gold exchange-traded fund, SPDR Gold Trust (GLD), recorded net positive inflows of more than $2.36 billion, a pace not seen since last February.
In addition, traders are moving to restore their positions in gold futures. According to data from the Chicago Mercantile Exchange (CME), open interest in gold futures increased by 7% yesterday (Thursday) compared to the bottom it reached last Tuesday. Traders’ reduced gold positions were a result of liquidation and used to cover positions in other assets, particularly stocks, after they experienced a massive collapse, as reported by the Financial Times last week.
- Beginners Guide to Commodities
- Armchair Academy: Introduction to Precious Metals
- What is moving the Bitcoin and Ethereum market this week?
- What US-China trade talks mean for futures traders
- Trade hopes fuel firmer sentiment
What is driving the gold price at moment?
Not only is the decline in investment appetite for riskier assets allowing gold to advance, but its sheen as a safe haven has created the conditions for its recovery and record new highs. The recent rise in Treasury yields has been primarily due to the erosion of their safe-haven status, along with concerns about inflation and the government’s budget, economist Mohammed El Erian told the BBC.
Furthermore, the inclusion of Treasury bonds in the middle of the trade war with China has exacerbated the market’s uncertainty, with speculation that China could sell its holdings (estimated at around $759 billion) to pressure the United States, according to the BBC. Thus, fear in the bond market reached its highest level since 2023 this week, as measured by the ICE BofAML US Bond Market Option Volatility Estimate Index (MOVE).
Investors are avoiding Treasuries this week
The heightened levels of fear and uncertainty in the fixed income market make rising yields less effective in pressuring gold lower. This all comes at a time when it is unclear what Trump’s next steps in his trade war will be, even after he suspends tariffs on non-Chinese imports.
The euro has surged to a three-year high against the dollar, marking a powerful signal that a full-blown crisis of confidence in the US currency is now underway — a moment that could, in time, be seen as the beginning of the dollar’s long-term decline. The dollar slid to $1.138 against the euro on Friday, forcing investors to confront a new reality: the world’s most trusted safe haven is no longer beyond question.
“It’s a major inflection point,” said one wealth manager in London this morning. “The dollar’s dominance has always rested on a foundation of trust — trust in US stability, trust in open trade, trust in responsible economic leadership. That foundation is cracking, and the euro’s strength is one of the clearest signs that global markets know it.”
Related ETFs
Core Physical Gold Gold
LON:WGLD / USD 
Gold 1x Daily Short Gold
SBUL / USD 
Gold 2x Daily Leveraged Gold
LBUL / USD Gold 3x Daily Leveraged Gold
3GOL / USD Gold 3x Daily Short Gold
3GOS / USD Physical Gold – GBP Daily Hedged Gold
GBSP / GBP
