Gold tops $3,300 but Nvidia leads tech sell-off in another bout of trade war turmoil on financial markets

Gold prices have reached unprecedented levels, exceeding $3,300 an ounce for the first time, while technology stocks experienced significant declines amid escalating trade war anxieties. This market volatility underscores investor apprehension and the flight to safe-haven assets.

Gold Price Surges to Record High

Bullion reached a peak of $3,339 on Wednesday, propelled by a weakening US dollar and intensifying tensions between the United States and China. This geopolitical uncertainty has driven investors towards the perceived security of precious metals like gold.

Dollar Weakness Boosts Sterling

The faltering dollar pushed the British pound to nearly $1.33, a level not seen since September. This occurred despite increasing expectations of interest rate cuts by the Bank of England. Typically, lower interest rates depreciate a currency; however, the pound has strengthened against the dollar due to growing concerns about a potential US recession.

Tech Stocks Tumble Amid Export Restrictions

The fluctuations in gold and currency markets coincided with a downturn in US technology stocks, spearheaded by Nvidia. This followed the White House’s imposition of restrictions on microchip sales to China. Nvidia shares plummeted by 7 percent, resulting in a substantial loss of market value, after the company cautioned that export controls on its H20 chip would cost it over £4 billion.

The H20 chip was specifically engineered for the Chinese market to support artificial intelligence applications, although it is less powerful than chips developed for the US market.

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ASML Update Dampens Industry Sentiment

Semiconductor industry sentiment further deteriorated following a cautious update from ASML, a major Dutch manufacturer of chip-making equipment. This raised additional concerns regarding the industry’s future prospects.

Wall Street Reacts Negatively

US stocks declined across the board, with the Nasdaq, heavily weighted in technology stocks, falling by 3.1 percent.

Analyst Perspective on Trade War

Francois Antomarchi, from Degroof Petercam Asset Management, commented, “The critical question is determining when we will reach the nadir, from a geopolitical standpoint, of this trade conflict. I am uncertain if we have reached that point yet.” This statement highlights the ongoing uncertainty and market sensitivity to the US-China trade relationship.