Gold Prices Shine On as Russian Tariff Threat Hits Home
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Spot gold rose 0.6% to $3,361.99 per ounce in early trading with U.S. gold futures up 0.4% to $3,371.30.
Safe Haven Returns
Threats from President Trump to impose tariffs on the EU and other nations such as Mexico were the main driver enticing nervous investors back to the safe haven of gold.
The President's threat to impose tariffs on Russia, potentially reaching 100%, in order to drive it towards making a deal to end hostilities in the Ukraine was another contributory factor.
A report in the Financial Times that the President had even asked Ukraine whether it had the capacity to strike Russia's capital Moscow is also likely to have hit the geopolitical fear target.
Trump had appeared to be more friendly toward Russia than Ukraine since the start of his new term in office, but new shipments of arms to Ukraine and a 'disappointment' in President Putin's attitude toward peace is leading to an evolution in his thinking. Whether that makes the world a safer place or not is another extra complication for investors.
Support for Gold
'Gold enjoys plenty of supportive factors, from expectations for Fed rate cuts, U.S. President Donald Trump's tariff threats, as well as persistent geopolitical and economic risks,' said Han Tan, chief market analyst at Nemo.Money.
As one can see below the technical indicators behind the case for gold are strong.
Such uncertainty this year has already helped drive gold-linked ETFs such as the SPDR Gold Shares (GLD), up 27% in the year-to-date and the VanEck Gold Miners ETF (GDX) up 54%.
Silver prices are also glistening today. Spot silver gained 0.4% to $38.28 per ounce, after hitting its highest level since September 2011 yesterday.
'If the current gold to silver price ratio is maintained, at gold prices above $3,440/oz, we will see silver above $40/oz,' said WisdomTree commodities strategist Nitesh Shah.
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