Gold Holds Near Record Highs

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    Christian Harris
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      Gold prices hovered around $2,820 per ounce today, maintaining levels close to the all-time high set in the previous session.

      The surge in demand for the precious metal has been driven largely by escalating trade tensions, as investors flock to safe-haven assets amid growing geopolitical uncertainty.

      The latest catalyst came from China’s announcement of retaliatory tariffs on US goods, following President Donald Trump’s implementation of a 10% levy on Chinese imports.

      Adding to the volatility, Trump agreed late Monday to postpone tariffs on Mexican and Canadian imports for a month, after both nations took steps to address his concerns regarding border security and drug trafficking.

      The inflationary effects of these tariffs are also contributing to gold’s appeal.

      As import costs rise, so too does the potential for higher consumer prices, making gold an attractive hedge against inflation.

      However, the broader economic implications of these trade policies could present a double-edged sword.

      While inflation fears typically support gold prices, there is also the risk that the Federal Reserve could respond to rising inflation with higher interest rates.

      This would be a headwind for gold, as the non-yielding asset becomes less attractive compared to interest-bearing investments in a rising rate environment.

      Strategic Opportunities For Traders

      Those betting on continued geopolitical tensions and inflationary pressures might consider long positions in gold, as the metal historically performs well during periods of economic and political instability.

      Conversely, traders anticipating a shift in Federal Reserve policy towards tightening might look for opportunities to short gold, particularly if strong labour market data suggests the US economy is resilient enough to handle rate hikes.

      This week’s economic calendar will be critical in shaping market sentiment.

      Investors are closely watching upcoming labor data, especially Friday’s non-farm payrolls report, for clues about the health of the US economy.

      A strong jobs report could reinforce expectations of tighter monetary policy, potentially capping gold’s rally.

      On the other hand, weaker-than-expected data might further fuel safe-haven demand, pushing gold to new highs.

      Active traders will need to stay alert to both economic indicators and geopolitical developments to capitalise on the evolving dynamics in the gold market.

      Sources: Trading Economics, MarketScreener

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