It's been a dramatic day on the market from a number of angles. For one, the S&P/ASX 200 Index (ASX: XJO) has taken a sharp turn downwards, currently nursing a chunky 1.6% loss at around 7,850 points. But for another, the price of gold has just hit yet another new record high.
Yep, this afternoon, the precious metal's spot price topped US$3,100, reaching as high as US$3,107.42 an ounce at one point.
It was only last week that we covered what was then gold's latest all-time high of US$3,059 an ounce. So things are moving quickly in this space it seems.
Unlike any stock in the world, humans have been putting a value on gold for thousands of years. As such, it's a pretty big deal when we see a new record-high price.
The yellow metal has proven to be a very lucrative investment indeed over the past two years. It was only back in December 2023 that gold was under US$2,000 an ounce. In the 16 months since, the metal is up over 50%.
It can be difficult to ascertain why gold prices move up and down, given the deep global market for the metal. However, it's arguably not too hard to work out what is going on this week.
Financial markets all over the world are currently bracing themselves for US President Donald Trump's 'liberation day' on 2 April. That is when Trump has promised to unveil his administration's latest volley of tariff taxes.
Trump has already made waves with new tariff announcements, increasing import taxes on China, as well as Canada and Mexico. That's in addition to new taxes on steel, aluminium and motor vehicles. However, 2 April is when his administration is set to unveil additional 'reciprocal tariffs' on almost every significant trading partner of the United States.
The problem is that no one, as of yet, knows exactly what this will entail. It looks likely that most of the world's advanced economies will have a broad-based tariff levied against them by the United States. That includes Australia, as well as Japan, South Korea and the European Union.
But the extent and severity of these tariffs remain anyone's guess. that's despite their planned immediate implementation.
Gold price surges on tariff uncertainty
Global markets rarely have to deal with this level of uncertainty. And investors clearly hate it, judging by both the ASX's reaction today, and the reaction of the US markets on Saturday morning (our time).
So what to do when there are high levels of uncertainty in global markets? Buy a safe-haven asset, of course.
Gold has played this role throughout history. And it looks as though investors have not forgotten it. Demand for the precious metal has skyrocketed, with uncertainty over the global trade environment being a clear driver.
Perhaps if 'liberation day' doesn't turn out to be as savage as investors are clearly fearing, we will see gold prices come off the boil. However, if the new tariffs are judged to be as harsh and destructive as the markets fear, we could see gold push into even higher uncharted territory. Watch this space.
