Gold prices surged to near-record levels on Wednesday as heightened trade policy uncertainty and a weakening U.S. dollar pushed investors toward safe-haven assets. Spot gold rose 0.4% to $2,755.2 per ounce, just shy of its October 2024 all-time high of $2,790.15. U.S. gold futures settled at $2,770.90, reflecting steady demand for the precious metal.
The rally in gold prices came as President Donald Trump reiterated his plans for sweeping tariffs on imports from China, Canada, Mexico, and potentially the Eurozone. On Truth Social, Trump hinted at a 10% tariff on Chinese goods starting February 1, escalating concerns about a trade war. Trump further noted that "universal tariffs on all imports to the U.S. are under consideration as well and will come at a later stage," according to Reuters.
The uncertainty surrounding the potential economic impacts of these tariffs has fueled market volatility, with investors increasingly turning to gold as a hedge against inflation. Analysts have noted that Trump's trade rhetoric has driven concerns about higher prices, which could pressure the Federal Reserve to maintain elevated interest rates.
The dollar index (DXY), which measures the greenback against a basket of six major currencies, dipped to a three-week low earlier in the session, further supporting gold prices. A weaker dollar makes dollar-denominated assets like gold more affordable for foreign investors.
In addition to trade tensions, global geopolitical concerns added to gold's appeal. Reports of an Israeli drone attack in southern Lebanon and uncertainty over a ceasefire between Israel and Hamas created additional demand for the metal.
Despite the strength in gold, U.S. Treasury yields provided some resistance to further price advances. The 10-year Treasury Inflation-Protected Securities (TIPS) yield edged up to 2.18%, limiting the upside for non-yielding bullion.
Other precious metals also saw gains. Spot silver held steady at $30.86, hovering near its one-month high. Platinum rose 0.8% to $950.50, while palladium surged 3% to $987.41.
Gold's recent climb has market participants eyeing the psychological $2,800 level, with some analysts predicting even higher gains if trade uncertainties persist. A technical analysis suggested that gold could surpass $2,800, with potential upside targets of $2,850 and $2,900.
Support levels for gold remain at $2,750, with the 50-day and 100-day Simple Moving Averages providing additional stability around $2,648. A decisive move below these levels could trigger a deeper pullback toward $2,515.