Rollercoaster ride for gold as investors panic over  impact of Donald Trump's trade tariffs

Gold Prices Volatile Amid Trade Tariff Uncertainty

Gold prices experienced significant volatility in trading sessions yesterday as market participants assessed the potential ramifications of Donald Trump’s newly implemented trade tariffs. The precious metal, often regarded as a safe haven asset during periods of economic instability, initially surged to a record high of $3,165 per ounce. However, gains were subsequently pared back, with prices retreating to $3,065 before stabilizing around $3,100.

Factors Contributing to Price Fluctuations

Market analysts attributed the dramatic price swings to a combination of factors, including initial profit-taking by investors and the notable exclusion of bullion from the recently imposed US import taxes. This exemption provided some relief to the gold market amidst broader trade concerns.

Central Bank Demand and Repatriation

Furthermore, the price of gold has been supported by increased activity from New York-based banks. These institutions have been actively repatriating gold bars from vaults held at the Bank of England, contributing to upward pressure on prices. In addition, central banks globally have been accumulating gold reserves at unprecedented levels. This buying trend is largely seen as a strategic hedge against rising inflation and potential weakening of the US dollar in the global financial system.

Gold’s Year-Over-Year Performance

Over the past year, gold prices have demonstrated robust growth, increasing by more than one-third. This surge reflects heightened investor interest in gold as a store of value amid economic uncertainties.

US Treasury Response to Bullion Revaluation Speculation

Recent speculation regarding a potential revaluation of the United States’ substantial gold reserves – estimated at 8,100 tons – was addressed by US Treasury chief Scott Bessent. Bessent refuted reports suggesting that the Trump administration was considering revaluing the nation’s bullion holdings. These reserves have been officially valued at $42.22 per ounce since 1973.

Potential Economic Windfall of Revaluation

Experts suggest that a revaluation of US gold reserves at current market prices could result in a substantial windfall for the US economy, potentially reaching $800 billion. Such a significant influx of value could have considerable implications for the nation’s financial standing.

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