Fears of a US-China trade war cause gold to reach a new high.

As investors worry about the effects of the US-China trade war, gold has surged to a new high.

On Wednesday, spot gold reached $3,357.40 (£2,540) an ounce, but then fell from its high. Since the beginning of the year, it has increased by around a third.
The increase comes after the governor of the US central bank stated that President Donald Trump’s tariff measures would probably result in higher prices, slower GDP, and a higher chance of unemployment.

In uncertain economic times, investors consider the precious metal to be a safer asset.

Jerome Powell, the chair of the Federal Reserve, stated at the Economic Club of Chicago on Wednesday that the United States economy may slow down and consumer prices may increase as a result of the higher-than-expected tariffs that were imposed in recent weeks.

Following a period of unrest on the world financial markets as investors responded to the imposition of additional import levies and the intensifying trade spat between the US and China, Mr. Powell delivered his address.

According to Stephen Innes, head of trading and market strategy at SPI Asset Management, gold is in “full lifeboat mode” and has turned into “the most crowded trade on the planet.”

“The dollar is stumbling under the weight of trade-policy whiplash, and portfolio managers have lost faith in anything that involves political discretion,” he stated.

This year’s gold rise has been likened by analysts to the Iranian Revolution over 40 years ago, when prices surged by about 120 percent between November 1979 and January 1980.

Last month, as worry about the effects of a global trade war set in, gold topped $3,000 an ounce for the first time.

Investors have rushed to gold as “a trust hedge against both inflation and government recklessness,” according to Jesper Koll of the advice company Monex Group.

“The search for’real’ assets is on. The’move fast and break everything’ attitude to policymaking that Team Trump has adopted is becoming more and more obvious,” he continued.

Investors have turned to so-called safe haven assets like gold as a result of the Trump administration’s implementation of tariffs, which are fees imposed on companies that import products from abroad. These tariffs have fueled inflationary worries.

Since taking office again in January, Trump has imposed 145% levies on China, and China has responded by imposing a 125% tariff on US goods.

Additionally, it’s unclear if the US’s broad tariffs on a number of other nations would resume after a 90-day respite.

According to the Trump administration, the policies would boost American manufacturing, create employment for Americans, and bring in billions of dollars in tax money.

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