Gold is currently surging at a rapid pace and has finally claimed a new high of $2854. The metal is athttps://watcher.guru/news/shiba-inu-1500-worth-of-shib-becomes-30-million-today the center of explosive holding activity as of late, with the rising global trade war narratives fueling its surge. Similarly, the global trade war tensions are also affecting the US dollar, creating scenarios that may impact its prestige and valuation in the long run.
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Why Is Gold Surging?
Gold is currently sitting at a new top spot at $2854. The precious yellow metal is gaining steady momentum amidst the rising trade war tensions and narratives that have lately been gaining steam. President Donald Trump has established new core roles starting with the deployment of his aggressive tariff strategy on nations to bolster the US economy.
In this wake, Trump has levied 25% tariffs on Mexico and Canada as well as imposed 10% tariffs on China, fueling this narrative up a notch.
The tariffs on Mexico and Canada have been paused for now as both countries have discussed the repercussions of it with the president soon after the order. China, on the other hand, has levied a counter-tariff on the US, spearheading the global trade war concept.
In times of such economic stability, investors have often shown interest in stabler assets like gold instead of the US dollar. Per Rashad Hajiyev, gold is still volatile and may dip further down below $2800 before it ascends to reach another ATH of $2900.
“Spot gold is back above $2,800, but that does not mean the fight over this level is over. I prefer a few more dips under $2,800 before gold rallies towards $2,900. Slowly but surely…”
Spot gold is back above $2,800, but that does not mean the fight over this level is over. I prefer a few more dips under $2,800 before gold rallies towards $2,900. Slowly but surely… pic.twitter.com/2024NwjnqX
— Rashad Hajiyev (@hajiyev_rashad) February 4, 2025
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USD in Trouble?
Gold has always shown an inverse relationship with the US dollar. When gold rises, the US dollar takes a dip, showing how the world of finance works on a deeper level. The consistent user interest in gold could spark an “anti-USD momentum,” triggering a fall in the US dollar’s valuation. However, if this phenomenon continues, it could destabilize the dollar, pushing the dollar down below the 107 level that it’s presently at. In addition to this, China’s strategy to impose counter-tariffs on America is also adding pressure, doubling down on USD from all sides.
“We’re still looking at these 10% tariffs on China and China’s retaliation, which is going to add some risk premium back into the market. We’ll see if there’s any sort of negotiation on the back end that might tamp these down as we saw with Mexico and Canada. But as it looks right now, the trade war with China is back up and running.” said Helen Given, FX trader at Monex USA.
The price of gold is also expected to surge primarily as global banks continue to diversify their holdings.
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