Gold prices rose to a record high on Wednesday as trade war tensions and concerns about global economic growth drove flows into safe havens following new tariff threats from US President Donald Trump.
Spot gold was steady at $2,935.10 an ounce at 1215 GMT, after hitting a record high of $2,946.85 an ounce earlier in the session. Prices hit record highs for the ninth time this year. US gold futures rose 0.1% to $2,953.1.
“The rally in gold appears to be driven by President Trump's comments on upcoming tariffs on cars and pharmaceuticals, which could pave the way for a push towards $3,000,” said Zain Vawda, market analyst at OANDA's MarketPulse.
Since taking office, Trump has imposed a 10% tariff on Chinese imports and set a 25% tariff on steel and aluminum. In addition to the tariff agenda, the US president said on Tuesday that he intends to impose tariffs on cars “around 25%” and similar duties on imports of semiconductors and pharmaceuticals.
“I don't see central banks stopping buying gold in the near future, but I expect them to continue diversifying their reserves into gold and support the price of gold,” said UBS analyst Giovanni Staunovo.
Gold bullion is considered a hedge against rising inflation and geopolitical uncertainties, but higher rates reduce the appeal of this non-yielding asset.
Meanwhile, market attention is also focused on the Federal Reserve's stance on interest rates, with the minutes of its January monetary policy meeting due to be released later in the day.
“Any downside impact (on gold) from today's FOMC minutes release is expected to be short-lived,” Vawda said.