Gold Rebounds, Supported by Trump's Tariff Policies and Stagflation Concerns
After experiencing its first weekly decline in 2025, gold has rebounded strongly. Despite some investors taking profits after the gold price reached record highs earlier this year, heightened uncertainty over the global economic outlook has further increased gold's appeal as a safe haven.
Particularly, the Trump administration is set to impose tariffs on Canada and Mexico on March 4th and plans to further increase taxes on major Asian economies, triggering concerns about economic slowdown. Investors believe this move could impact the global supply chain and trade environment, further increasing the risk of economic stagflation (slow growth but high inflation).
Analysts point out: "As Trump's tariff policy is about to be implemented, concerns over economic slowdown are rising, enhancing the attractiveness of gold as a safe haven asset."
Strong Dollar Fails to Suppress Gold as Safe Haven Demand Supports Prices
Despite the strengthening of the dollar last week due to expected tariff policies, which made dollar-priced gold more expensive for foreign investors, gold remains favored by investors.
Trump's trade policies have heightened market concerns over a slowdown in U.S. economic growth while boosting the dollar index. However, historical data shows that when facing global economic uncertainty, gold often acts as a hedge, and a strong dollar does not diminish its value as a safe haven.
Market experts state: "The threat of tariffs has increased market concerns over the U.S. economy, and gold typically performs well in such uncertain times."
Stagflation Worries Persist, Gold May Strengthen Further
Recent U.S. economic data indicates that inflation remains high while growth momentum slows, sparking market concerns over stagflation. If the U.S. economy enters a stagflation phase, the Federal Reserve may adjust monetary policy to stimulate the economy, further supporting gold prices.
The market anticipates that the Federal Reserve might begin cutting interest rates in the second half of 2025 to alleviate growth pressure. This expectation also supports gold, as a lower interest rate environment reduces the opportunity cost of holding non-yielding assets like gold, making it more attractive.
Overall, as the Trump administration's tariff policy is about to take effect, concerns over stagflation intensify, and expectations of Fed rate cuts rise, the safe haven demand for gold is expected to continue increasing. Moving forward, the market will closely monitor Fed policy moves, global trade dynamics, and economic data to assess the future trend of gold prices.
