Gold and silver have seen further gains this week amid the ongoing tariff uncertainty.
The weekend brought further trade war escalation when President Trump announced 50% tariffs on steel and aluminium imports, raising from 25%. Although the UK has been spared the higher rate, the new 50% levy comes in today (June 4th) and is another blow to global businesses.
Trade relations between the US and China also look to be deteriorating, with both sides accusing the other of not meeting trade agreements. The escalation in US-China tensions has worried markets, who had hoped last month’s trade deal may lead to further reductions in tariffs.
Markets have entered this week with a risk-averse mindset, and gold and silver have both benefited from safe haven demand. Having closed for the weekend at $3,293, gold has jumped 2% to hit $3,360 at the time of writing. The metal approached $3,400 but saw some selling pressure and resistance at that level. In GBP gold is close to £2,500 once more, having briefly passed this level on Tuesday’s market open. In Euros, gold is €2,955 with the weaker dollar reducing the gains somewhat in other currencies.
Silver has enjoyed stronger gains however, and has reduced the gold-silver ratio to 97 after another period above 100. In USD gold climbed more than 4% to reach $34.55 currently, matching recent highs. The weaker dollar has reduced the gains in GBP and Euro, but still leaves silver at £25.51 and €30.33 respectively.
Away from tariffs, geopolitical uncertainty also remains. Talks between Russia and Ukraine continue without any agreement, while the two continue to trade attacks. The UK also announced a stepping up in defence spending to ensure the country reaches “war-fighting readiness” to meet risks from Russia and China. The spending plan highlights the increasingly volatile state of the world, where military action remains a current and genuine threat.
Central bank buying also continues, with a net 12 tonnes of gold bought by central banks in April. The recent chaotic trade policy from the US has only accelerated many countries plans to move away from the dollar, with gold one of the primary choices, helping to support the gold price even at historically high levels.
Gold has entered a period of consolidation since hitting the all-time high in mid-April, with some big price swings in the weeks since. This week has certainly moved in favour of precious metals however, and investors remain ready to turn to gold and silver if the US administration continues to drive uncertainty.
