Augmont Gold: Gold rockets to record high again amid tariff war and USD sinks to 35-month low
In the wake of increasing trade tensions and a weakened US Dollar, COMEX Gold prices surged by 7%, reaching $3254, marking a significant rise year-to-date. As investors seek safe havens, gold’s appeal grows amidst concerns over inflation, economic slowdown, and geopolitical risks. Augmont Gold highlights the strengthened case for higher gold allocations in such an uncertain global environment, with further gains expected if the dollar weakness persists. However, caution is advised as rapid price increases may lead to potential corrections
Gold Surges to New Heights
COMEX Gold’s active month contract closed 7% higher at $3254, marking the highest weekly percentage increase since March 27, 2020. Prices are up $270, or 9%, during the last four sessions, and year-to-date they are up $593, or 22.5%.
Escalation in US-China Tariff War
Last week, the United States substantially boosted duties on Chinese imports, adding a new 125% penalty on top of an existing 20% duty, bringing the total to 145%. This strong approach eclipsed President Donald Trump’s 90-day postponement on heavier tariffs for other countries, raising concerns about broader economic consequences.
US Dollar Plunges to Multi-Year Lows
Investors seeking safety drove up gold prices, aided by a weakening US Dollar Index, which fell below 100 for the first time in over three years. The US dollar is falling across the board as markets react to China’s new reprisal against US imports. China stated early Friday that it will levy 125% tariffs on US imports starting Saturday, up from 84% previously declared.
Foreign Investor Reaction to Protectionist Policies
The dollar has declined over 7% since Trump’s inauguration and over 2% since his comprehensive trade policy was announced last week, contrary to Wall Street’s expectations. The decrease in the dollar has coincided with sell-offs in US stocks and Treasuries. This could indicate that foreign investors are responding to Trump’s protectionist plans by selling US assets, putting downward pressure on the dollar.
Gold as a Safe Haven Amid Rising Global Risks
The rationale for increasing gold allocations is stronger than ever in this climate of rising tariff uncertainty, poorer growth, increased inflation, and persisting geopolitical dangers. The evolving global trade, economic, and geopolitical landscape strengthens gold’s position as a safer investment haven.
In this environment of rising tariff uncertainty, poorer growth, greater inflation, and persisting geopolitical threats, the case for increasing gold allocations has never been stronger. The evolving global trade, economic, and geopolitical landscape reinforces gold’s significance as a safer investment refuge.
Federal Reserve’s Warning of Economic Trade-Offs
According to the minutes from the most recent Fed meeting, policymakers are nearly unified in acknowledging the combined problem of increasing inflation and slowing GDP, warning that the Federal Reserve will confront “difficult trade-offs” in the coming months.
Silver May Futures Daily Chart
Short-Term Correction Possibility in Gold Prices
Gold prices fell today from a record high as trade tensions eased after US President Donald Trump spared smartphones and laptops from “reciprocal” tariffs. The ongoing trade and tariff dramas have increased financial market volatility and uncertainty. If dollar weakness continues, the gold price could reach $3300 (~INR 95000) in the near term.
Having said that, one needs to be very cautious, as prices have extended through the roof in a short span. So, if prices correct below $3200 (~INR 93000), profit-booking can take prices to southwards $3100 (~INR 90000).
Gold Jun Futures Daily Chart
Silver Recovery After Sharp Downtrend
As suggested last week, the worst is behind us for Silver’s downfall after a severe selloff of up to $28. Prices have recovered back above $32 (~ INR 94000). We are likely to see this rally extending further towards $33 (INR 95500) and beyond this week.
Silver May Futures Daily Chart
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