Gold prices have taken a sharp downturn, falling nearly 1% from their record highs, as President Donald Trump’s latest tariff announcements caused the U.S. dollar to strengthen.
On February 3, 2025, spot gold fell to $2,784.30 per ounce, while U.S. gold futures dropped to $2,815.20 per ounce, after reaching an all-time peak just days earlier. The driving force behind this decline? The stronger dollar, fueled by heightened fears of a global trade war sparked by Trump’s new tariffs on imports from Canada, Mexico, and China.
The newly imposed tariffs come with no exemptions, leading to retaliatory actions from Canada, Mexico, and China, as well as legal challenges at the World Trade Organization. Experts from Reliance Securities and Citi suggest that the stronger dollar and reduced expectations for interest rate cuts are behind gold’s fall. Analysts also predict that the ongoing tariff battle could send gold prices soaring to $3,000 per ounce.
The new tariffs have sent shockwaves through global markets. The Australian dollar plunged 2.1%, hitting a five-year low, while the Canadian dollar, Mexican peso, and several other currencies saw similar declines. Global stock markets also experienced major drops, with Australia’s S&P/ASX 200 index slipping 1.8%. As for commodities, copper and gold prices dipped, although oil prices saw a slight increase. Experts warn that the ongoing tariff war could lead to financial instability, inflation, and a potential recession, reshaping the global trade landscape.
In conclusion, gold’s retreat from its record highs reflects the strengthening dollar, which is directly tied to President Trump’s new tariffs, triggering a wave of market volatility and economic uncertainty across the globe.
