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Informist, Thursday, Apr. 17, 2025

MUMBAI - Futures contracts of gold on COMEX rose to a fresh all-time high in early Asian trade on Thursday as the ongoing global trade tensions and fears of an economic slowdown triggered a rise in safe-haven demand for the precious metal.

While the US commenced trade talks with Japan to negotiate tariffs on Japanese imports, it did little to settle the market as tensions between the US and China rose. Additionally, US President Donald Trump on Tuesday ordered an investigation into possible tariffs on all US critical minerals imports, marking another escalation in his dispute with global trade partners and an attempt to pressure China.

At 0808 IST, the most-active June gold contract was up 0.1% at $3,350 per ounce. Earlier in the day, the contract had hit a lifetime high of $3,371.9 per ounce. 

The US announced that China will now face tariffs up to 245% on exports to the US as a result of Beijing's retaliation on reciprocal tariffs imposed by Trump to address "unfair trade practices", escalating the trade war between the world's two largest economies. A day after Beijing ordered its domestic airlines to not take further deliveries of Boeing jets, the US government limited exports of Nvidia's NVDA H20 artificial intelligence chips to China.

Though China has signalled willingness to negotiate with the US amid an intensifying trade war, it has demanded more constructive dialogue, pushing back against what it calls "trade bullying".

The US and Japan kicked off tariff negotiations with an aim to reach a deal as soon as possible, though it did not result in an immediate halt on the US' tariffs on Japan. However, preparations are underway for the second round of talks to take place later this month, Reuters reported.

Meanwhile, US Federal Reserve Chair Jerome Powell warned of an impending economic crisis in the US. Powell said on Wednesday that the Fed would wait for more data on the economy's direction before changing interest rates, but cautioned that Trump's tariff policies risked pushing inflation and employment further from the central bank's goals. 

"The outlook for gold remains constructive, supported by a robust mix of macroeconomic and geopolitical factors that reinforce its intrinsic value as a store of value and diversification asset in uncertain times," Dow Jones cited Pepperstone's Quasar Elizundia as saying in a note. If current conditions continue, gold's medium to long-term target is projected around $3,734 per ounce, the research strategist said.

Given the global uncertainities, Goldman Sachs has raised its outlook for gold to $3,700 an ounce by the end of 2025, the third such hike this year, reports showed. The investment bank had in March hiked its 2025 gold price target to $3,300 per ounce.  End

Reported by Shreya Shetty

Edited by Vandana Hingorani

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