Trump’s Tariff Policy Could Boost Gold Prices Amid Rising Safe-Haven Demand

 

President Donald Trump’s decision to impose tariffs on some of America’s closest trading partners this week is expected to have a positive impact on gold prices, according to analysts at RBC Capital Markets.

Last weekend, Trump announced a 25% import tariff on Canada and Mexico, along with a 10% tariff on China, citing these countries’ roles in drug trafficking and illegal immigration into the U.S. However, just hours before the tariffs were set to take effect on Tuesday, Trump announced a delay in tariffs for Mexico and Canada after discussions with their leaders. Only the tariffs on China were implemented, prompting retaliatory tariffs from Beijing and raising concerns about a renewed trade war between the two nations.

China’s Ministry of Finance responded by imposing a 15% tariff on U.S. coal and liquefied natural gas imports, along with an additional 10% duty on crude oil, agricultural equipment, and automobiles starting February 10. Additionally, China’s Ministry of Commerce introduced export controls on rare earth elements and exotic materials, where China is a leading global producer. These materials include tungsten, tellurium, ruthenium, and molybdenum.

Separately, Beijing added Calvin Klein’s parent company, PVH Corp (NYSE:PVH), and biotechnology firm Illumina (NASDAQ:ILMN) to its list of “unreliable entities” and initiated an antitrust investigation against Google, owned by Alphabet (NASDAQ:GOOGL).

Following China’s tariff announcement, spot gold prices edged higher, nearing recent highs as investors sought safe-haven assets amid escalating trade tensions.

In a client note, RBC Capital Markets analysts stated that prolonged tariff policies could lead to higher inflation and slower global growth, echoing recent warnings from economists and investors. Such trends, they predicted, could further drive gold prices upward.

However, they cautioned that in the short term, gold prices might experience volatility as traders weigh various factors, including the negative impact of a stronger U.S. dollar and reduced consumer purchasing power due to anticipated inflation acceleration.

"Beyond the direct impact of tariffs on gold flows, we believe the more compelling and lasting story here is what this means for gold’s appeal both as a risk hedge and a safe haven," the analysts noted.

"The news of tariffs, along with the wave of executive orders and actions in the early days of the Trump administration, paints a picture of uncertainty that we believe could support gold moving forward."

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