Tariff turmoil pushes gold to fresh high as mining stocks soar
The price of gold has climbed to another record high, as anxiety around Donald Trump’s tariff plan and a falling dollar push investors into the traditional safe haven asset.
The price of bullion rose 1.5 per cent to break $3,200 (£2,451) per troy ounce for the first time on Friday as equities across Asia fell amid the continued fallout from Donald Trump’s tariff delay.
The yellow metal had been caught up in the aggressive sell-off at the height tariff-induced market rout despite its traditional role as a safe haven asset for investors.
Spot prices for bullion – having risen over 30 per cent since the start of 2024 – fell from $3,166/oz to $2,973/oz between 2 and 6 April, with analysts speculating that investors were being forced to liquidate their gold holdings in order to meet margin calls from lenders.
Pepperstone’s Michael Brown attributed the short-lived fall to gold’s “risk premium” being unwound after it was exempted from Trump’s now-delayed ‘Liberation Day’ tariffs.
But since 6 April, gold prices have turned positive again, hitting a fresh all-time high after what has been the metal’s biggest two-day move since 2020.
Strategists have put the latest bull run down to a weak dollar – which makes the metal more affordable for investors outside the US – and speculation that central banks will need to cut rates faster than expected to stave off an economic slowdown.
The greenback has fallen to a 10-year low against other major currencies this week.
UBS Global Wealth’s Dominic Schinder told Bloomberg TV that additional rate cuts from the Federal Reserve would give gold another “leg up” as the yield on holding cash – another port of call amid widespread bearish sentiment – is lower.
The rally helped London-listed gold miners to lead the FTSE 100 higher on Friday morning. Fresnillo rose some 5.9 per cent, while Endeavour jumped over 4.5 per cent in early trades.
Peel Hunt brokers upgraded precious-metal-miner Fresnillo from ‘hold’ to ‘add’ in a note, arguing that gold and silver prices staying higher for longer would free up cash flow at the commodities giant.
“[The first quarter] saw gold and silver prices well ahead of expectations on rising market uncertainty,” they wrote. “The extreme US tariff announcements simply added to this uncertainty.
“In our view this will lead to sustained high gold prices, only fading slowly to our unchanged long-run assumption of US$2,000/oz.”