Gold Pulls Back from Record High Despite Soaring Chinese Demand and Escalating US-China Trade War
Monday, 4/14/2025 13:54
GOLD PRICE retreated slightly on Monday after setting a new all-time high of $3245 per ounce during Asian trading, while Chinese gold prices marked their third consecutive daily record, with trading volumes reaching their highest level since the Covid-19 crisis as US-China trade tensions intensified
, writes Atsuko Whitehouse at BullionVault
The People’s Bank of China has allocated fresh gold import quotas for some commercial banks, according to
Bloomberg today, as Beijing responds to strong haven demand from institutional and retail investors in the face of an escalating trade war.
Gold prices on the Shanghai Gold Exchange (SGE) had earlier fixed at third consecutive SGE benchmark high of ¥762 per gram on Monday, equivalent to $3247 per ounce. This marked a premium of $16 to London, after wholesale bullion in the metal’s No.1 consumer market increased the weekly average to a ten-month high of $31 per ounce last week, which is nearly 4 times higher than its historical premium, providing an incentive to new imports to China.
"China has been bidding gold every single day last week, fuelled by tariff uncertainty and yuan depreciation, helping
the metal to push to a new all-time high," said a precious metals trader.
Trading volumes on the SGE surged nearly 70% in April so far compared to last month, to the highest since the height of the Covid-19 crisis in August 2020.
The trading volume in gold derivatives at the Shanghai Futures Exchange (SHFE) also surged 55% this month from the previous month.
“Chinese retail investors have been buying gold in response to the trade war, with volume on the SGE and SHFE surging,” said Bruce Ikemizu of
the Japan Bullion Market Association in his latest report, noting a recent gold price pattern in which the precious metal was sold off in New York to fall below $3000 as stock prices fell, but then bounced back to recover $3000 during Asian trading hours.
Spot gold fell 0.4% to $3223 per ounce on Monday after reaching its all-time high of $3245 during Asian trading. The yellow metal marked its 23rd all-time high this year so far at $3230 last session at London's afternoon benchmarking auction, posting a 5.8% weekly gain for the week, its best five-day performance since early March 2024 when
geopolitics pushed a 6-day run of new records.
“Gold continues to hit record highs amid strong haven buying,” said Daniel Hynes, Senior Commodity Strategist at ANZ, noting that risks and uncertainty remained high despite Trump announcing a 90-day pause on the reciprocal tariffs except for a 145% tariff on most imports from China. The US president also paused some levies on semiconductors and the electronics supply chain over the weekend, though he indicated a specific tariff will be announced in due course.
Responding to Trump’s tariff policy, China raised its tariffs on US goods to 125% last week and the government has put civilian government officials in Beijing on “
wartime footing,” meaning bureaucrats in the foreign affairs and commerce ministries have been ordered to cancel vacation plans and keep mobile phones switched on around the clock, according to Reuters.
European stocks rose with the Stoxx 600 rallying more than 2% on Monday, while futures for the S&P 500 and the Nasdaq 100 advanced with Apple Inc shares jumping as much as 6.4% in premarket trading.
Gold priced in Euros fell 0.7% to €2828 per ounce on Monday, as the single currency for the 27-nation union strengthened against the US dollar in FX markets despite the European Central Bank being expected to reduce rates this week.
The UK gold price in Pounds per ounce meanwhile dropped 1.2%.
The Dollar index – a measure of the US currency's value versus its major peers – fell for a fifth day on Monday to a three-year low.
Meanwhile, ten-year US Treasury yields – a benchmark rate for government as well as many finance and commercial borrowing cost – edged lower after jumping half a percentage point last week to mark the biggest weekly surge in over two decades. Bond yields rise when bond prices fall.
"The new highs in gold are signalling a shift in appetite for US assets," said Ryan McIntyre, senior managing partner at the
Canadian global asset management firm Sprott.
"Confidence in the US has clearly been shaken so people are looking to diversify."
Goldman Sachs raised its overall price forecast by $400 to $3700 per ounce by the end of the year, while UBS and Bank of America predict gold prices will reach $3500 in 2025.
Prices for silver, primarily an industrial metal, which finds nearly 60% of its annual demand from industrial uses, recovered from an earlier 1.5% drop to $31.30 per ounce.
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