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0 News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/gold-prices-set-to-rise-amid-escalating-trade-tensions-and-tariff-fears/
Gold has seen modest gains in Asia, rising by $8, as investors begin to brace for the possibility of increasing buying flows driven by the looming threat of tariff hostilities.
The financial markets have long anticipated tariffs under President-elect Trump’s administration, but what remains uncertain—and therefore unpriced—is the potential retaliation from other economies. The fear is that these retaliatory measures could escalate into a protracted trade war, with significant economic and geopolitical ramifications.
Trump’s tariff policies are well-known, and the expectation that he will impose them upon taking office on January 20 is firmly priced into the market. However, the market is less prepared for how countries targeted by these tariffs might respond. Speculation is growing that some nations, particularly Canada, could act quickly with retaliatory tariffs. The Canadian press has suggested that Canada may preemptively release a list of U.S. goods that will face retaliatory tariffs, especially if Trump moves forward with his plan to impose a 25% tax on all Canadian products. Such a preemptive strike would undoubtedly heighten tensions and be seen as a provocative move, one that would likely be met with frustration from both Trump and U.S. officials.
In addition to Canada, other geopolitical developments could further disrupt markets. In China and Hong Kong, the U.S. Department of Defense recently added Tencent to its list of Chinese military companies operating in the U.S. While this is not a direct tariff, the inclusion of such a high-profile company on the list could significantly sour relations between the U.S. and China. Tencent’s stock fell 7.4%, reflecting the market’s unease. For China, this is just another in a series of grievances that could lead to retaliation, especially given that the U.S. has been accusing China of not following through on previous trade commitments. With tensions running high, the question remains: How will China respond?
Possible responses from China could include devaluing the yuan (RMB), seeking new trade relationships with other countries (evident in China’s growing ties with Mexico), or implementing retaliatory tariffs on U.S. imports. Each of these options would escalate the trade dispute, creating further uncertainty in the global economy.
On the U.S. side, a report from The Washington Post suggested that Trump’s aides were exploring the possibility of applying universal tariffs only to critical imports, rather than across all goods. While this idea was quickly dismissed by Trump himself, it remains a possibility that could ultimately support risk assets in the long run, if implemented. However, if the Canadian retaliatory tariffs come to fruition, the situation could quickly turn into a tit-for-tat escalation, which would heighten market volatility.
In times of heightened uncertainty, investors often flock to gold as a safe haven, and the potential for a tariff-driven trade war could push gold prices higher, potentially towards the $2800 level. Gold’s appeal as a hedge against risk is strong in such scenarios, especially when geopolitical tensions rise and market volatility increases. While the specifics of the tariff responses remain unclear, the mere prospect of escalating hostilities is likely to keep gold in the spotlight as a key asset for those seeking protection from the storm of impending trade wars.
News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/gold-prices-set-to-rise-amid-escalating-trade-tensions-and-tariff-fears/
