What’s going on here? Gold recorded an all-time high of over $3,080 on Friday, with investors racing to protect their portfolios from the possibility of a trade war. What does this mean? Investors are nervous: American stocks are wobbling, and the US president’s ever-escalating tariffs could knock them further off-kilter. So they’re putting their faith in gold – the asset known for providing relative stability (almost) no matter what. The precious metal is up 17% this year already. Plus, nearly $13 billion has been pushed into related ETFs – some turnaround from comparable negative figures over the last two years. Even the VanEck Gold Miners index notched a decade high, rising 35% this year. And it’s not just retail investors seeking shelter: central banks worldwide have continued to stockpile gold. That trend – combined with all the interest in ETFs – means that Goldman Sachs now expects the metal to hit $3,300 by the end of the year, up from its previous forecast of $3,100. Why should I care? For markets: New year, new president, new strategy. Investors have been all over the podium, sending silver up by 20% and copper by 28%. And with many doubting that US stocks will continue their world-leading run, they’ve swapped expensive American shares for cheaper European and Chinese ones. Makes sense: the best play is usually to keep your eggs in multiple baskets – or in this case, countries, sectors, and assets. That way, a fall in one area could be offset by a rise in another. Zooming out: Pay up… someone. All the new tariffs on the table leave companies with two options: pay the fees themselves or pass them on to customers (or both). The first option could impact broader corporate profit and share prices, while the second risks pushing inflation – and, in turn, interest rates – higher. Investors know this all too well: the president warning American carmakers not to raise prices was enough to send the sector’s stocks south. |