Despite the current market chaos, which is on a roller coaster due to Trump 2.0’s tariff threats and the looming possibility of a damaging trade war, one asset is shining bright gold.
A flight to safety is currently underway as the market holds its breath. Are we truly on the brink of a trade war, or is this the biggest game of “who blinks first” we’ve seen yet?
As of yesterday, following some concessions related to border control, Trump 2.0 announced that tariffs on Canada and Mexico would not come into effect today but would instead be put on hold for one month.
For a brief moment, there was moderate rejoicing. However, he made no mention of China. At the time of writing, China is still facing 10% tariffs on its exported goods.
Beijing, however, did not take this sitting down. In retaliation, it imposed tariffs on select U.S. goods and implemented export controls on certain metals. Additionally, China escalated its response by adding more U.S. firms to its list of “unreliable entities” and announcing an antitrust investigation into Google.
The tariffs announced by China’s Finance Ministry include a 15% levy on U.S. coal and LNG, as well as a 10% tariff on crude oil and farm equipment. These measures are set to take effect on February 10.
However, there are reports that Trump is planning a phone call with Chinese President Xi Jinping in an effort to smooth things over.
Despite this small ray of hope, the market isn’t buying it. Gold continues to shine, reaching a new all-time high of $2,833.70 at the time of writing.
With concerns that Trump 2.0’s tariff threats will be an ongoing issue throughout the year potentially sparking trade wars on multiple fronts, leading to inflation and economic slowdown gold is emerging as the ultimate safe haven.
The question on every investor’s mind is: Will gold hit $3,000 this year?
I certainly have my own opinion, as I am a gold bug after all. But to delve deeper into this topic, be sure to check out a future episode of the MarketBites Webinar, where I will provide a more detailed analysis.
Till next time, trade safe!
By James Trescothick
Head of Market Research and Market Analysis at OneRoyal