Investment - Articles - US gold futures hit record levels as market hit by tariffs

 Susannah Streeter, head of money and markets, Hargreaves Lansdown: ‘’Gold’s panic ascent shows that even safe haven assets are not immune to the volatility unleashed in the confusion of the tariff age. Gold had been shining as a shelter amid the trade storm, but the bullion market has been blindsided by a specific threat of duties on gold bar imports into the US, sending US futures prices soaring to record levels. The US Customs and Border Protection agency ruling that one kilo and one-hundred-ounce bars would not be exempt from tariffs is a shock move, and the sharp divergence between spot prices and futures demonstrates the wave of surprise pulsing through the market. This is a particular blow to Switzerland which is the biggest player in the gold refining market, given a 39% tariff rate on its exports to the US came into effect yesterday.

 If there is follow through and no intervention, this could threaten New York’s dominance in the gold futures market given prices are risen sharply compared to other trading centres. As we’ve seen multiple times before, there could still be back tracks and revisions, but it’s another shot of unwelcome volatility, in a market which has been seen as a refuge of relative safety. But it’s also a reminder for investors to remain wary. Investing in gold is far from a one-way bet. It’s often risen in times of economic or political crisis, it has also a history of losing its lustre. After a strong run in the 70s and early 80s, it took over 23 years to get back to its 1983 high. Given the volatility associated with gold, it usually should only make up a small portion of a diversified investment portfolio.’’