Superpowers Battle, Gold is Up

This week, the gold and silver markets experienced continued volatility, fueled by escalating tensions between the world’s two largest economies, the United States and China. The primary catalyst was President Trump’s announcement of steep new duties on Chinese imports, now reaching 145%. In retaliation, China imposed 125% tariffs on all U.S. imports, essentially halting trade between the two rivals. The announcement was broader in scope than markets expected, poorly timed amid a slowing global economy, and not fully priced in. Investors swiftly moved into safe-haven assets, propelling gold to a record high of $3,245/oz before a brief pullback caused by broader market selloffs and liquidity stress.

This latest round of tariffs has shaken earlier expectations of a more business-friendly Trump 2.0. In the near term, the policy is deflationary—chilling consumer spending and business investment—before potentially turning inflationary. Gold has remained resilient, supported by strong physical demand (particularly from Asia and central banks), growing fears of stagflation, and accelerating de-dollarization. Despite recent equity selloffs, gold is expected to average $2,950/oz, with potential highs near $3,400/oz in 2025.

Silver continues to underperform gold due to its industrial ties. The trade war has weakened global manufacturing, reduced import demand, and triggered destocking, especially in the U.S. While investment demand may offer limited support, silver is expected to trade in a $28–$35/oz range unless macro conditions shift significantly. Likewise, PGMs face pressure from declining auto demand and disrupted supply chains.

Looking ahead, a sustained recovery in white metals and industrial commodities hinges on tariff de-escalation, a dovish Federal Reserve, and improved economic visibility—none of which are expected before late 2025 or early 2026.