Breaking: Gold price conquers $3,100 for the first time ever on tariff war fears

Dhwani Mehta FXStreet

The record rally in Gold price remains unabated as buyers conquer the $3,100 threshold for the time on record. Heightening fears of a potential global trade war and stagflation in the United States (US) intensify safe-haven demand for the traditional store of value, Gold.

The latest Wall Street Journal (WSJ) report highlighted that US President Donald Trump could aim for higher and broader reciprocal tariffs on the ‘Liberation Day’, April 2, triggering a fresh risk-aversion wave across the board.

“Advisers have considered imposing global tariffs of up to 20% that would hit virtually all US trading partners,” the WSJ reported.

It’s a ‘sell everything’ mode for markets, as nervousness grows alongside concerns over a widespread tit-for-tat tariff war, which could intensify inflationary pressures and stifle global economic activity. Investors typically resort to the ultimate safe-haven, the Gold price, in times of market unrest and panic.

The US Dollar (USD) and US Treasury bond yields bear the brunt of mounting US stagflation fears, aiding the record-setting rally in Gold price.

That said, it remains to be seen if Gold price can sustain the ongoing uptrend as traders could resort to profit-taking ahead of the April 2 tariffs announcements by Trump.

Technically, Gold price risks a correction as the daily Relative Strength Index (RSI) has entered into an extremely overbought zone, currently nearing 76.

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD rises above 1.3550 after UK CPI data

GBP/USD preserves its bullish momentum midweek and trades above 1.3550 in the American session. The UK annual Consumer Price Index (CPI) inflation picked up to 2.9% in July, meeting estimates, while core CPI rose by 2.6% YoY in July versus 2.5% expected. The Federal Reserve (Fed) will publish the minutes of its July policy meeting later in the day.

EUR/USD climbs to 10-week high above 1.1600 on broad USD weakness

EUR/USD gathers bullish momentum and trades at its highest level since early June above 1.1600 on Wednesday. The US Dollar stays under heavy bearish pressure after the US Treasury announced that it will increase the size of liquidity support buyback operations for longer-dated nominal coupon securities. Later in the day, investors will scrutinize FOMC Minutes for fresh clues on policy outlook.

Gold climbs back above $4,350 as USD remains depressed ahead of FOMC Minutes

Gold climbs back above $4,350 during the first half of the European session, reversing a part of the previous day's heavy losses. The US Dollar attracts some sellers, and for now seems to have stalled this week's goodish recovery from a two-month low, which is seen as a key factor supporting the commodity. Bulls, however, might opt to wait for more cues about the US Federal Reserve's future policy path before placing fresh directional bets on the non-yielding yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP defend key support as ETF inflows return

Bitcoin’s upside remains capped on Wednesday while the downside appears strongly supported above $64,000. The Crypto King’s early week rebound lost momentum near $65,000 as investors assessed the impact of geopolitical tensions in the Middle East.

Minutes of the July FOMC meeting serves as one of today’s economic highlights

Bear steepening turned into bear flattening in Europe yesterday. Daily changes on the German yield curve ranged between +2.4 bps (30-yr) and +5 bps (2-yr). EU swap rates added 0.9 bps (30-yr) to 4.5 bps (2-yr). The US/Iran stalemate and higher energy prices offer a first explanation.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.