Gold has jumped to a fresh high as investors fret over the impact of the trade war between the US and China. Spot gold touched $3,357.40 (£2,540) per ounce on Wednesday, before dipping from its peak. It has risen by around a third since the start of the year. The rise follows comments bythe head of US central bankwho said President Donald Trump's tariff policies are likely to mean slower growth, higher prices and unemployment risks. The precious metal is viewed as a safer asset for investors during times of economic uncertainty. At the Economic Club of Chicago on Wednesday, Federal Reserve chair Jerome Powell said higher-than-expected tariffs announced in recent weeks could result in slowing US economic growth and rising prices for consumers. Mr Powell gave his speech after a period of turmoil on global financial markets as investors reacted to the new import taxes coming into effect and the escalating trade war between the US and China. Gold is in "full lifeboat mode" as it has become "the most crowded trade on the planet," said Stephen Innes, head of trading and market strategy at SPI Asset Management. "The dollar is stumbling under the weight of trade-policy whiplash, and portfolio managers have lost faith in anything that involves political discretion," he added. Analysts have compared this year's gold rally to the Iranian Revolution more than four decades ago, when prices jumped by almost 120% from November 1979 to January 1980. Goldcrossed $3,000 an ounce for the first time last monthas uncertainty over the impact of a global trade war set in. Jesper Koll from advisory firm Monex Group said investors have flocked to gold as "a trust hedge against both inflation and government recklessness". "Everyone is looking for 'real' assets. It's increasingly clear that Team Trump's 'move fast and break things' approach to policy making will not change," he added. The introduction of tariffs by the Trump administration, which are taxes charged on businesses importing goods from overseas, has fuelled fears of inflation, which has driven investors to so-called safe haven assets like gold. Trump has put taxes of 145% on China since he returned to the White House in January, and China has retaliated with a 125% tariff on US imports. There is also uncertainty about whether sweeping US tariffs on a host of other countries will go into effect, after being paused for 90 days. The Trump administration has said the measures will bring manufacturing back to the US, create jobs for American workers and generate billions of dollars of tax revenues. Get our flagship newsletter with all the headlines you need to start the day.Sign up here.
Gold hits new record over US-China trade war fears
TruthLens AI Suggested Headline:
"Gold Prices Reach Record High Amid US-China Trade War Concerns"
Bbc News
7.1
TruthLens AI Summary
Gold prices have surged to unprecedented levels as concerns mount over the ongoing trade war between the United States and China. On Wednesday, spot gold prices reached a peak of $3,357.40 per ounce, reflecting an approximate 33% increase since the beginning of the year. This rise in gold prices comes on the heels of alarming statements from Jerome Powell, the chair of the Federal Reserve, who indicated that President Trump's tariff strategies could lead to slower economic growth, increased inflation, and a potential rise in unemployment. Investors are turning to gold, which is traditionally viewed as a safe-haven asset during periods of economic instability, as a hedge against these uncertainties. Powell's remarks were made during a speech at the Economic Club of Chicago, following a tumultuous period in global financial markets triggered by new import taxes and escalating tensions between the two economic giants.
The current gold rally has drawn comparisons to historical spikes, particularly the surge seen during the Iranian Revolution, which saw prices soar nearly 120% from late 1979 to early 1980. Analysts highlight that the ongoing trade war, characterized by significant tariffs imposed by the Trump administration—145% on Chinese imports and a 125% retaliatory tariff from China—has intensified fears of inflation. These developments have led many investors to seek refuge in gold as a tangible asset amid fears of government mismanagement and market volatility. Jesper Koll from Monex Group noted that investors are increasingly looking for 'real' assets to safeguard against inflationary pressures and the unpredictability of U.S. trade policies. As the situation evolves, the Trump administration maintains that these tariffs will revitalize American manufacturing, create jobs, and ultimately generate substantial tax revenues, although the long-term effects remain uncertain.
TruthLens AI Analysis
The recent surge in gold prices to record highs amid escalating US-China trade tensions reflects deeper economic anxieties and a flight to safety among investors. This trend is driven by fears of slower growth, inflation, and policy unpredictability, as highlighted by Federal Reserve Chair Jerome Powell’s warnings. Below is a detailed analysis of the implications and potential motivations behind this coverage.
Economic Uncertainty and Safe-Haven Demand
Gold’s rally underscores its role as a hedge against economic instability. Powell’s remarks about tariffs harming growth and employment have amplified investor concerns, pushing them toward "real" assets like gold. The comparison to the 1979–1980 gold spike during the Iranian Revolution suggests markets anticipate prolonged turbulence, possibly worse than current headlines imply.
Market Sentiment and Political Recklessness
Analysts like Stephen Innes and Jesper Koll frame gold’s rise as a response to distrust in political decision-making, particularly the Trump administration’s aggressive trade policies. The phrase "trust hedge against government recklessness" implies a narrative critiquing populist economic strategies, potentially shaping public skepticism toward unilateral trade actions.
Potential Manipulation and Narrative Shaping
The article’s focus on gold’s "crowded trade" status and dramatic price comparisons could exaggerate panic, diverting attention from other market dynamics (e.g., central bank policies or corporate earnings). By emphasizing gold’s surge as a direct consequence of trade wars, the piece may oversimplify multifactorial market movements, possibly to reinforce a bearish outlook or justify defensive investing.
Target Audience and Sector Impact
This news likely resonates with conservative investors, commodity traders, and policymakers monitoring inflation signals. It indirectly benefits gold-related equities (miners, ETFs) while pressuring sectors vulnerable to trade wars, like manufacturing. The tone appeals to those skeptical of globalization’s stability, aligning with populist or protectionist economic views.
Global Power Dynamics and AI Influence
While the article doesn’t overtly link to geopolitical shifts, the trade war’s framing as a catalyst for gold’s rise subtly critiques US-China rivalry. AI usage in drafting isn’t evident, but selective quotes (e.g., "move fast and break things") could reflect algorithmic emphasis on polarizing language to drive engagement.
Credibility Assessment
The report is factually sound but leans into sensationalism by likening current trends to historical crises. Its reliability hinges on the Fed’s warnings and gold’s actual performance, though the narrative’s focus on fear-driven demand may downplay other factors like speculative trading or currency fluctuations.