US Tariffs Push Gold Prices To Record High: Benefits Of Investing In Yellow Metal

Following US President Donald Trump’s announcement to impose extensive reciprocal tariffs on more than 175 countries, gold prices touched a record high of $3,167 per ounce on Thursday.

Trump’s move, aimed at “liberating” the US from “unfair” trade policies with partner nations, is expected to upend the global economy. Hence, uncertain investors rushed towards safe-haven options like gold, pushing its price to an all-time high.

In his speech at the White House, the US President blamed the trade imbalance for rising issues with the US economy, including disruption to its local manufacturing ecosystem. He imposed tariffs ranging from 10%-49% on dozens of countries, a list of which was also shared by the White House. Trump also confirmed a baseline tariff of 10% on all imports into the US.

With rising uncertainty over the global economic outlook, markets are expected to take a hit. On Thursday, Indian indices opened in the red, following Asian markets after Trump announced reciprocal tariffs. On the other hand, spot gold rose 0.5% at $3,148.05 an ounce as of 0325 GMT, after hitting an all-time high of $3,167.57 earlier in the session.

In year-to-date respect, gold has now rallied roughly 19% from Jan. 1 levels of Rs 78,000 per 10 grams of yellow metal. On Apr. 3, gold price in India stood at Rs 92,830 for 24-carat 10 grams. Typically, the yellow metal’s price rallies during periods of political and financial instability. Tariffs and geopolitical tensions are also among the factors contributing to gold price hikes. 

"There’s also some front running going on amongst traders who anticipate (Trump’s) policies will drive central banks to park their reserves in gold rather than U.S. dollar-denominated assets," Capital.com’s financial market analyst Kyle Rodda told Reuters.

Financial experts recommend investing in gold as a key strategy to protect investors’ money from market volatility. In 2024, the precious yellow metal delivered 26% returns, outshining markets and other investment assets.

Here are the key benefits of investment in gold: 

Gold has historically maintained its value over time, making it an effective hedge against inflation. During times of global uncertainty, people turn to investment in gold due to its consistency over time. 

Gold has a low correlation with stocks and bonds, meaning it can help reduce overall portfolio risk. Adding gold to your portfolio can help balance returns, especially amidst periods of uncertainty. 

Gold is a highly liquid asset. This means it can be easily bought and sold. Whether in the form of physical gold (bars, coins, jewellery) or financial instruments (ETFs, sovereign gold bonds, gold futures), investors can quickly convert gold into cash.

In contrast to bonds or fixed deposits, gold carries no counterparty risk. It is not dependent on any financial institution’s ability to repay, making it a reliable asset in times of financial crises.