Gold rose above $2,860 per ounce on Friday, climbing back near record highs and heading for its sixth consecutive weekly gain. The precious metal has set new records repeatedly this week, driven by accelerated central bank purchases and a surge in safe-haven demand amid rising global trade tensions and economic uncertainties.
Gold heads for sixth weekly gain
President Trump followed through on his plans to impose a 10% levy on all Chinese imports, triggering Beijing to announce retaliatory tariffs on US energy goods, set to take effect next week. This move intensified worries about a prolonged trade conflict between the world's two largest economies, further fueling investor demand for gold as a hedge against risk.
Compounding the uncertainty, Trump also suggested that the US could take control of the Gaza Strip for reconstruction, adding geopolitical risk to the market's already heightened anxiety. This suggestion contributed to a broader sense of instability, prompting further capital flows into gold, which is often seen as a store of value in times of geopolitical strife.
Eyes on central banks
Loose monetary policies by major central banks have also provided additional support to gold prices. The European Central Bank (ECB), Bank of England (BoE), and Bank of Canada (BoC) all recently cut interest rates, with the BoC also announcing the end of its quantitative tightening program. These accommodative monetary policies reduce the opportunity cost of holding non-yielding assets like gold, making the precious metal more attractive to investors. Furthermore, the Reserve Bank of India (RBI) is expected to implement rate cuts this week, signaling continued global efforts to support growth amid a slowing global economy.
What markets expect
Markets are also pricing in two 25 basis point rate cuts from the US Federal Reserve this year, reflecting growing expectations of dovish policy measures to counterbalance potential economic slowdowns. As the market awaits the US jobs report later today, all eyes are on the labor market data for further insights into the state of the US economy and the potential trajectory for the Fed's policy actions. Gold's rally, supported by both macroeconomic factors and geopolitical risks, highlights the growing appeal of the metal as a safe-haven investment in an increasingly uncertain global environment.
