Gold Jumps to $2900, Lease Rates Fall on Latest Trump Tariffs and China's 'Tit for Tat'
Monday, 2/10/2025 16:11
GOLD PRICES climbed but the lease-rate cost of borrowing metal fell Monday, with bullion hitting new all-time records above $2900 per Troy ounce despite the US Dollar strengthening and longer-term interest rates rising after President Donald Trump announced 25% trade tariffs on all US imports of steel and aluminium,
writes Atsuko Whitehouse at BullionVault.
Surging as high as $2910 in London's spot market, the price of physical bullion fixed around $2906 at the 3pm benchmarking auction in the precious metal's key storage and trading hub.
Gold's 7th new daily record of 2025 to date, that was 1.1% higher from Friday afternoon, when
gold recorded a 6th weekly gain – the longest stretch since New Year 2023.
"Gold remains in a sweet spot, with little standing in its way," reckons Richard Franulovich, analyst at Australia's Westpac bank, pointing to gold's safe-haven appeal amid the unpredictable and disruptive Trump administration's trade-and-foreign policy programme.
"The potential of gold also getting caught up in the tit-for-tat tariffs is causing a dislocation in the physical market," claims Daniel Hynes, senior commodity strategist at Australasian bank ANZ.
US gold futures contracts today rose as high as $2934 per ounce, also a new all-time high but holding the "premium" for New York settlement around $25 over loco-London physical prices, in line with this year's $22 average so far.
The cost of a
1-month lease to borrow gold in London fell to an annualized rate of 3.72% per annum this morning, down from 5.7% last week.
However, it remains significantly higher than the 0.08% recorded on 2 January, and so far this year has averaged 2.32%, up from 0.49% in December and 0.08% in November.
The Dollar index – a measure of the US currency's value against a basket of major peers – rose to a 1-week high following Trump's promise of 25% import tariffs on aluminum and steel, while 10-year US Treasury yields, a key benchmark for government and commercial borrowing costs, steadied at their highest level since mid-December.
Gold for UK and Euro investors added 1.6% to fresh records at £2342 and €2816 per Troy ounce respectively.
Already hit by an additional 10% levy on Chinese imports to the US, China retaliated with counter-tariffs Monday, taking effect at 12:01am Beijing time and impacting approximately $14 billion worth of US goods per year.
Trump at the weekend also announced plans to introduce reciprocal tariffs later this week on any nations that tax US imports.
Separately, Beijing announced on Friday that it would launch a pilot program
allowing ten major insurers to invest up to 1% of their assets in bullion for the first time.
"This will certainly be positive in terms of fresh demand," says Rhona O'Connell at brokerage Stone X Group, noting that implementation would be gradual, as insurers are expected to take a cautious approach to formulating programmes and allocation.
Gold prices on the Shanghai Gold Exchange flipped to a small premium to London prices on Monday despite the metal reaching a new domestic Yuan-price high of ¥677 per gram.
Today's premium around $1 per ounce contrasts both with the typical average above $7 and with last week's discount of $11, seen as Shanghai re-opened following the heavy consumer gold-buying festival of Chinese New Year.
China's central bank expanded its gold reserves for the third consecutive month in January, adding 5 tonnes to reach 2,285 tonnes, according to the latest data published by the State Administration of Foreign Exchange on Friday.
Shares in major US aluminum producer Alcoa and also the United States Steel Corp. both rose sharply ahead of the New York opening.
US President Trump and Japan's Prime Minister Shigeru Ishiba reportedly discussed potential Japanese investment in United States Steel Corp. during their summit on Friday.
The
price of silver, primarily an industrial metal, rose as much as 1.6% to $32.33 Monday morning before briefly sinking back to $31.91 only to rally again.
This week will see US Federal Reserve Chair Jerome Powell deliver semi-annual testimony before Congress on Tuesday and Wednesday, while the US consumer price index (CPI) – a key inflation measure for the world's largest economy – will be released by the Bureau of Labor Statistics mid-week.
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