• President Trump’s announcements of tariffs on Liberation day has initiated a sort of a trade war. China has responded with its own tariffs on US goods.  
• Tariffs on imports into the US are likely to hit the country’s growth and inflame inflationary pressures in the near term. 
• The ensuing uncertainty around economic activity implies that the demand for the metal will stay supported, although it may not be linear.

President Trump pushed the US tariffs rate to the highest in over a century and has triggered retaliation by China. In this uncertain backdrop, gold stands out as one of the few stable assets. Recently gold prices hit new highs at $3134/ounce on 2 April as Trump announced new tariffs on its major trading partners. He outlined a 10% baseline tariff on all imports, with higher rates on countries running trade surpluses (excess of exports over imports) with the US. These regions include the EU, China, and most Asian countries. Over the past few years, gold price moved up due to geopolitical tensions, high government debt, monetary policy actions and inflation concerns. While the price has moved below the peak reached in the month earlier, gold is still appealing amid ongoing uncertainty.

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