Gold Hits $3300 as US-China Trade War 'Cracks Dollar Hegemony'
Wednesday, 4/16/2025 14:43
The PRICE of GOLD leapt to fresh all-time highs in all major currencies bar the Swiss Franc on Wednesday, peaking above $3300 per Troy ounce in London's bullion market and gaining 8.5% since this time last week while the Dollar fell and global stock markets dropped yet again as the US-China trade war worsened still further.
Setting its 24th new all-time gold high of 2025 to date with this morning's peak $17 above the $3300 mark, the price of London gold in US Dollar terms has now risen by 22.0% since Donald Trump was inaugurated for the second time on 20 January.
More industrially-useful silver meantime reclaimed a 2-week high above $33 per ounce only to slip back 17 cents, keeping
the Gold/Silver Ratio at Depression-era levels above 100.
Gold had already set a fresh record high in Yuan terms overnight in China, taking jewellery prices in the precious metal's No.1 mining, importing, central-bank buying and consumer nation firmly above ¥1000 per gram as wholesale prices on the Shanghai Gold Exchange held $20 per ounce above London quotes.
Offering importers well over twice the typical incentive for new bullion shipments, that echoes
the impact of surging Chinese private-sector gold demand on global price discovery last spring.
"We have not seen any specific trigger for [today's] move," says analyst Rhona O'Connell at brokerage StoneX, "but it is certainly possible that Trump's call [late Tuesday] for a S.232 investigation into critical minerals may have helped."
Trump's
latest executive order aims to reduce "supply chain vulnerabilities and market distortions due to reliance on a small number of foreign suppliers" for vital technology inputs such as lithium, cobalt, rare earth elements and graphite − much of them exported from China.
It followed yesterday's news that giant AI chipmaker Nvidia (Nasdaq: NVDA) has been told by Washington to restrict exports of its H20 AI chips to China, hitting its profits by $5.5 billion and knocking 6.4% off its share price as it vowed to start making chips in the USA,
a move praised by Trump on his TruthSocial platform.
"The historic rise in gold prices is not only due to global safe-haven demand," says Hong Hao, managing director and chief strategist at the Bank of Communications' Bocom International division.
"[It] also
reflects the complex interweaving of cracks in the Dollar's hegemony, policy games among countries, and multi-level market dynamics.
"In this time of financial turmoil, gold can become a safe haven for investors in turmoil."
With President Xi Jinping's tour of south-east Asia today taking him to Malaysia after concluding new trade deals with Vietnam, "China is telling us they are a reliable trading partner, more than the US. We never had problems dealing with them," says Abdul Aziz, Kuala Lumpur's former ambassador to Washington.
"In the long run, America's influence
will be reduced."
With the US-China trade war worsening Wednesday, the Dollar slipped again on the FX market, losing 0.5% against other major Western currencies to re-test last week's 3-year lows on its DXY index.
The threat of a crash in the US Dollar now offers "a new tail risk" to investment managers worldwide according to the latest survey from US financial giant Bank of America, cited by 7% of respondents.
Overall, a balance of 61% of the 164 investment professionals polled − between them managing $386bn in assets − expect the Dollar to lose FX value over the next 12 months, the worst level of confidence in the US currency since spring 2006.
"China needs to make a deal with us, we don't have to make a deal with them," said a Trump spokesperson on Tuesday, claiming to quote the US President directly.
"China wants what we have – every country wants what we have – the American consumer. Or to put it another way, they need our money."
Today's falling Dollar didn't stem new record highs for gold in most other currencies as well as the Yuan, with the Euro price of gold hitting €2919 per Troy ounce and
the UK gold price in Pounds per ounce jumping within £2 of £2500 while the spot price in Japanese Yen pushed further above ¥15,000 per gram.
Over 2-in-5 respondents to the latest Bank of America Global Fund Manager Survey say that gold will remain the best performing asset in 2025.
But against that figure of 42% however, 49% of professional investors believe that gold is now the most 'crowded trade' in the market, knocking the former Magnificent 7 of US tech stocks − meaning Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Meta (META), Nvidia (NVDA) and Tesla (TSLA) − off top spot for the first time in 2 years.
Taiwan's giant chip-maker TSMC (TPE: 2330) has seen demand for its US-made chips leap since Trump began hiking trade tariffs on foreign imports,
leading it to raise US prices by 30% according to one tech-news site.
Ahead of Trump's widely-expected and repeatedly promised trade war, last month saw US consumer spending beat analysts' forecasts, with retail sales rising 4.6% per year in March according to new data Wednesday.
China's economic growth also blew past expectations, with Beijing's official statistics agency today saying that GDP expanded by 5.4% per year in Q1 as industrial output leapt 7.7% and retail sales rose 5.9%.
"It seems that fewer countries are trusting the US," says analysis from UK fund managers Invesco, "and therefore [weakening trust in] US Treasuries as a 'safe haven' asset class.
"This has resulted in greater buying of gold, which seems to have become the preferred 'safe haven' asset class of choice."
Yet as gold prices surged past $3300 on Wednesday, US Treasury bond prices rose, edging Washington's longer-term borrowing costs down to 1-week lows of 4.32% per annum on 10-year debt.
That's half-a-percentage-point below January's pre-inauguration highs, and 0.7 points beneath late-2023's
16-year records highs in US bond yields.
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