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Highlights
- Gold reaches new record high amid global trade tensions
- Market volatility fuels demand for safe-haven assets
- Central banks and monetary policy shifts support gold surge
Gold prices soared to a historic high, climbing past $US3,190 an ounce during early trading in Asia on Friday. This latest rally highlights the growing investor preference for safe-haven assets amid mounting global economic uncertainty.
The surge in gold comes on the heels of a turbulent week in financial markets. Uncertainty around U.S. trade policies, especially concerning tariffs, has rattled investors and added to fears of a potential worldwide recession. President Donald Trump's inconsistent stance on tariffs and ongoing trade negotiations has fueled dramatic shifts across equities, bonds, and currency markets.
While a temporary 90-day pause on tariff hikes was announced, concerns remain high. Duties on Chinese imports have reached levels of at least 145 per cent, and skepticism is growing around the timeline and effectiveness of current trade discussions. Despite assurances from U.S. officials that progress is being made, investor confidence has been shaken.
The upward momentum in gold has been striking. The precious metal posted more than a 3 per cent gain in two consecutive sessions before reaching Friday's peak. As of 6:55 a.m. in Singapore, spot gold was trading at $US3,186.08 an ounce, putting it on track for a weekly rise of nearly 5 per cent.
Much of this performance can also be attributed to broader economic factors. Expectations for additional monetary easing by the U.S. Federal Reserve have increased demand for non-yielding assets like gold. Additionally, central banks worldwide have been actively increasing their gold reserves, further boosting demand.
The effects of this rally are being felt across the mining sector. Companies like Newcrest Mining (ASX:NCM) and Northern Star Resources (ASX:NST) are likely to benefit from the sustained increase in bullion prices, given their exposure to gold production and reserves. Additionally, Perth-based Evolution Mining (ASX:EVN) may also see increased investor interest in light of higher margins at elevated gold prices.
With the global economic outlook remaining uncertain and trade tensions unresolved, gold continues to assert its role as a trusted hedge. The momentum behind the precious metal signals a broader shift in sentiment, as investors weigh risk and seek stability in an increasingly volatile market landscape.
