Trade war: Gold bolts past key $3,200 mark on dollar slide

Gold prices breached the crucial $3,200/oz level for the first time on Friday, fuelled by a weaker dollar and an escalating trade war that sent investors rushing toward safe-haven assets.

Spot gold was up 0.7 per cent at $3,195.09 an ounce, as of 0700 GMT. Bullion rose more than 1 per cent to scale an all-time peak of $3,219.84 earlier in the session, and has gained around 5 per cent this week.

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US gold futures climbed 1.1 per cent to $3,213.40.

“The rapid weakening of the US dollar seems to be the main driver of gold’s rebound at the moment. That seems to reflect an ongoing exodus from USD-based assets, with stocks and bonds’ selloff amid tariff policy uncertainty,” said Ilya Spivak, head of global macro at Tastylive.

Dollar decline

The dollar was down 0.5 per cent against its major peers, making greenback-priced bullion cheaper for overseas buyers.

Major stock indexes also fell after US President Donald Trump ratcheted up tariffs on Chinese imports to 145 per cent, but hit a 90-day pause on previously announced tariffs for dozens of countries.

China’s retaliation

China has been matching Trump’s tariff hikes, sparking fears that Beijing could push duties on the US beyond the current 84 per cent.

The “$3,500 is the next round number people will be looking at. I suspect we won’t get there immediately or without bumps along the way,” Capital.com’s financial market analyst Kyle Rodda said. Apart from tariffs, central bank demand, expectations of interest rate cuts by the Federal Reserve, geopolitical instability in the Middle East and Europe, and increased flows into gold-backed exchange-traded funds also fuelled the metal’s rally this year.

US consumer prices fell unexpectedly in March but inflation risks are tilted to the upside, data showed.

Traders now bet that the Fed will resume cutting rates in June and probably reduce by a full percentage point by the end of 2025.