Gold prices hit a record high on Wednesday, bolstered by fears of a new trade war between the United States and China after Beijing slapped tariffs on U.S. imports in a response to new U.S. duties on Chinese goods.
Spot gold was up 0.2% at $2,848.69 per ounce, as of 0253 GMT, after hitting a record high of $2,853.97 earlier in the session. U.S. gold futures gained 0.2% to $2,879.70.
U.S. President Donald Trump said on Tuesday he is in no hurry to speak to Chinese President Xi Jinping to try to defuse the trade tensions between the world’s two largest economies.
China imposed targeted tariffs on U.S. imports on Tuesday and put several companies, including Google, on notice for possible sanctions, in a measured response to Trump’s tariffs.
“The next major inflection point for gold is probably the $3,000 figure… China may be more encouraged to keep buying gold for reserves if the trade war escalates,” said Ilya Spivak, head of global macro at Tastylive.
Meanwhile, the Trump administration’s plans for trade tariffs come with inflation risks, three Federal Reserve officials warned on Monday, with one arguing that uncertainty over the price outlook calls for slower interest rate cuts than otherwise.
While gold is considered an inflation hedge, higher interest rates could dampen its appeal among investors.
Key economic data on investors’ radar this week includes the ADP employment report due at 1315 GMT and the payrolls report on Friday, which could shed more light on the health of the U.S. economy.
“Gold demand ought to be partially supportive for other precious metals but their sensitivity to risk appetite has seen them underperform,” said Spivak.
Spot silver rose 0.2% to $32.15 per ounce, platinum edged 0.3% higher to $966.95, and palladium fell 0.9% to $981.75.