Gold is reaffirming its status as a safe-haven asset amid the recent rounds of trade tariffs imposed by the United States. Unlike traditional fiat currencies like the dollar, gold doesn’t depreciate in value during times of economic distress. This makes the precious metal an extremely attractive investment during recessions, as it can preserve the value of an investor’s portfolio, allowing them to weather economic upheavals with minimal losses.
President Donald Trump’s controversial rounds of tariffs have plunged global markets into turmoil over the past couple of weeks, causing historic stock market losses and increasing the possibility of a global recession. With countries like China, currently the second-largest economy in the world, imposing retaliatory tariffs against the U.S., many investors fear a trade war that could further destabilize the global economy.
Gold typically shines in such volatile times as investors rush to purchase it to insulate their portfolios. Spot gold prices have surged by $400 since the start of the year, rising by 2.1% to hit $3,044.94 an ounce on Wednesday after President Trump’s reciprocal tariffs took effect. Thanks to a 0.7% drop in the U.S. Dollar Index, dollar-priced gold is also cheaper to purchase for overseas buyers.
An all-out trade war could cause gold prices to rise even further by making demand for the precious metal skyrocket. If the U.S. and China continue to impose escalating tariffs on each other’s imports, the two economic giants could trigger a major trade war and send the global economy into a recession. UBS analyst Giovanni Staunovo notes that rising fears of such a conflict are creating the perfect opportunity for gold, and he predicts that gold prices will continue their upward trend, potentially reaching $3,200 per ounce in the coming months.
With Beijing holding meetings to determine how best to respond to President Trump’s tariffs, markets in the U.S. and abroad are closely watching the U.S. Federal Reserve’s next move on benchmark interest rates. A lower rate would be positive for zero-yield bullion because it reduces the opportunity cost of holding gold, which doesn’t generate interest or dividends, making it more appealing compared to interest-bearing assets.
According to Staunovo, the Consumer Price Index (CPI) won’t be as relevant as benchmark interest rates, since markets will be more focused on how the Trump administration’s tariffs might impact inflation. The analyst believes the Fed is likely to cut interest rates later in the year if signs of a slowing U.S. economy become more apparent, making gold an even more attractive investment option.
Gold’s surge in value highlights investor anxiety over escalating trade tensions and economic uncertainty. As traditional markets wobble, the precious metal is once again proving its reliability as a portfolio stabilizer. If trade wars and inflation fears persist, gold could cement its role as the ultimate hedge against economic volatility. Gold industry participants like GEMXX Corp. (OTC: GEMZ) are likely to benefit from these tailwinds supporting the market of this precious metal over the coming months and years.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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