At the beginning of the week, Donald Trump causes a stir again with the announcement of new tariffs. The gold price then reached a new record high on Monday. The shares of gold mines are also in demand. But what connection is between US customs policy and the yellow precious metal?
• US President Trump announces further tariffs
• Gold price increases to new record high, including gold mines shares in the upswing
• US customs policy stirs up fear of global trade war and drives investors into safe haven
The latest announcement by US President Donald Trump to raise tariffs of 25 percent on all steel and aluminum imports has once more lifted investors on the financial markets. The new tariffs conjure up further uncertainties, and investors are increasingly investing in safe asset classes such as gold. As a result, the gold price reached a new record high on Monday at more than $ 2,900 per troy ounce.
The shares of the gold mines operator Barrick Gold and Newmont Mining at the NYSE on Monday too to a strong trade start: Barrick Gold shares in the Gold are temporarily gaining 2.7 percent to $ 17.50, while Newmont papers by 2.61 percent Add to $ 46.01. The Barrick Gold share has already been 9.94 percent more expensive since the start of the year, and the plus at Newmont Mining has been a whopping 20.47 percent since the beginning of January. The gold price also increased by around 11 percent.
Possible effects of US customs policy drive investors into safe ports
The price increase in gold reflects the higher demand from investors who want to protect their capital in times of economic uncertainty. Historically, gold acts as a safe harbor, especially during geopolitical tensions or economic turbulence. The current customs announcements now have a positive effect on the gold price, since they can result in a global trade war, geopolitical tensions and negative effects on the global economy.
According to “Pune News”, analysts of the Citigroup, in addition to possible commercial wars and increasing geopolitical risks under President Trump, also state strong purchases from the central banks as the reason for the gold price increase. Central banks from Poland, India, China and Turkey in particular were recently noticed as the great buyer of the yellow precious metal, Joe Cavatoni from the World Gold Council told Nai 500. “Banks in emerging countries are very keen on gold and have the opportunity to buy more gold. Strategically speaking, they will continue to be buyers,” said the expert. This is above all the strategy of diversifying the dollar assets of the central banks in view of the uncertainties through current US trade policy through gold purchases.
In parallel to the increase in the gold price, the shares of gold mines operators also benefit. Because companies like Barrick Gold and Newmont Mining automatically make more profit with higher gold prices.
According to experts, the gold price continues
Experts do not see an upward trend for the gold price at the moment. According to the citi analysts, the factors mentioned that are currently driving the gold price will continue to exist and further increase the attractiveness of the precious metal. Alex Eabkarian, COO of the precious metal dealer Allegiance Gold, also said according to “Nai 500” that the prices for gold, but also silver, should continue to rise due to market uncertainty. Kelvin Wong, a senior market analyst for the Asia-Pacific room at Oanda, also believes in a continuing upward trend. “At the moment I don’t see any high probability for a correction, unless we are experiencing a very strong upward trend in the US dollar,” he told “Reuters”.
Relationship between tariffs and gold price complex and unclear
Overall, it is important to note that the effects of tariffs on the gold market are complex. While the uncertainty and the risk of such commercial barriers tend to support the gold price, a stronger US dollar, which often goes hand in hand with higher tariffs, can burden the gold price. Because a stronger dollar makes gold more expensive for buyers outside the USA, which can dampen demand.
“Marketwatch” reporter Mark Hulbert has also examined how tariffs have affected the gold price in the past. It showed that gold historically performed rather poorly under high tariffs than under low tariffs. However, he restricted this statement because there were relatively few “customs regimes” in the history of the United States, which made it difficult to establish an actual connection between customs changes and gold prices. Overall, according to Hulbert, the situation is complex and one would go too far if one would certainly say that tariffs are clearly negative or positive for gold.
It is currently shown that the introduction of US tariffs and corresponding announcements lead to an increase in the gold price and the shares of gold mines operators at short notice, since investors are increasingly relying on secure systems in uncertain times. In the long term, however, the effects depend on various factors, including the reaction of the global economy to tariffs, the development of the US dollar and the reaction of the central banks.
Editor finance.net
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