(Bloomberg) — Gold hit a new all-time high as the dollar pushed lower and traders sought safety amid concerns over President Donald Trump’s tariff measures.
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Bullion surged as much as 1.4% to $2,798.59 an ounce, surpassing its previous all-time high set in October. A weaker dollar makes bullion more appealing for investors holding other currencies as it’s priced in the US currency.
The softness in the greenback came after a widely anticipated rate cut by the European Central Bank and the latest data that showed inflation-adjusted gross domestic product in the US increased an annualized 2.3% in the fourth quarter after rising 3.1% in the prior three-month period.
The precious metal has been trading in a choppy fashion since the US elections, with Trump’s decisive victory initially sparking a selloff as investors flocked to riskier assets linked to his pro-growth agenda. But it has clawed back ground in recent weeks, as the president’s repeated threats on tariffs reginited haven demand.
“You have the uncertainty of what’s going to happen with Trump, with his policies and tariffs and things like that could impact the growth of the United States,” said Phil Streible, chief market strategist at Blue Line Futures. “When you get rising inflation and you get declining growth, you get stagflation, then gold is one of the best-performing commodities in that environment.”
“I think that’s what people have been positioning for. There’s renewed strength, renewed desire to be involved with that product,” said Streible.
Trump’s policies are widely seen by economists as fanning inflation and potentially hurting economic growth. Federal Reserve Chair Jerome Powell said Wednesday the US central bank was in a “wait-and-see” mode with regard to the potential impact of the new administration’s policies.
Powell and his peers at the Federal Open Market Committee held interest rates steady at their first meeting of the year, adding that they won’t rush to lower rates as they are waiting to see further progress on inflation.
While Trump’s plans are still unclear, he set a deadline of Saturday for tariffs of 25% on Mexico and Canada, and has also said he intends to impose across-the-board levies that are “much bigger” than the 2.5% figure previously suggested by Treasury Secretary Scott Bessent.
