Gold prices soared to a fresh record high on Monday, surpassing $3,384, as investor fears over Donald Trump’s aggressive tariff strategy and growing tensions with the Federal Reserve drove demand for safe-haven assets. Meanwhile, the US dollar weakened further, and global stock markets posted mixed performances.
With many financial markets still shut for the Easter holiday, trading volume remained thin. However, analysts are closely watching the upcoming release of key economic indicators, expected to offer insights into the economic fallout from the intensifying US-China trade war.
Several countries, including Japan, are reportedly in negotiations with Washington to limit the impact of the White House’s sweeping tariffs. Japan is currently the most high-profile economy seeking such a deal.
In a strong response, China on Monday cautioned other governments against compromising Beijing’s interests for quick relief.
“Appeasement will not bring peace, and compromise will not be respected,” said a spokesperson for the Chinese commerce ministry.
“To seek one’s own temporary selfish interests at the expense of others’ interests is to seek the skin of a tiger,” Beijing said, warning that such a strategy “will ultimately fail on both ends and harm others.”
These statements came shortly after President Trump hinted at possible progress in negotiations with China.
“Yeah, we’re talking to China,” he said. “I would say they have reached out a number of times… I think we’re going to make a very good deal with China.”
Amidst rising global uncertainty, gold prices surged, bolstered by a weaker dollar, which has been under pressure following Trump’s recent public criticism of Federal Reserve Chairman Jerome Powell.
Trump lashed out after Powell warned that the new tariffs were “highly likely to generate at least a temporary rise in inflation,” reducing the likelihood of an interest rate cut.
“If I want him out, he’ll be out of there real fast, believe me,” Trump remarked, calling for a sharp reduction in borrowing costs.
Powell, however, stood firm, reaffirming that he had no intention of resigning early and emphasizing the Fed’s independence.
“[Monetary policy independence] is a matter of law,” Powell said.
In the currency market, the dollar slipped against major counterparts, with the yen and euro emerging stronger. Investors are increasingly pricing in political instability and volatility in US policy-making.
“Donald Trump has hurt the credibility of the dollar with his aggressive moves on tariffs — for a long time,” French Finance Minister Eric Lombard told La Tribune Dimanche.
“If Powell is pushed out, this credibility will be harmed even more, with developments in the bond market.”
Chicago Fed President Austan Goolsbee echoed this concern during an interview on CBS’s Face The Nation, stating:
“There’s virtual unanimity among economists that monetary independence from political interference… is really important.”
In equity markets, the Nikkei 225 in Tokyo fell 1.2% due to the yen’s strength, while other Asian indices like Shanghai, Seoul, Singapore, Manila, and Jakarta edged higher. Hong Kong and London markets remained closed for the holiday.
Crude oil prices also declined amid fears of weaker demand, as broader concerns about the global economic outlook continued to grow.
Stephen Innes of SPI Asset Management commented:
“The reputational hit to the US brand is real, and it’s not fading quietly… Investors, allies, and even central banks are starting to bake in the idea that American policymaking… is now a geopolitical variable — not a given.”
Key Market Figures (as of 02:30 GMT):
- Tokyo – Nikkei 225: ▼ 1.2% at 34,300.35
- Shanghai Composite: ▲ 0.5% at 3,292.98
- Hong Kong – Hang Seng Index: Closed for a holiday
- Euro/Dollar: ▲ $1.1476 from $1.1371
- Pound/Dollar: ▲ $1.3353 from $1.3270
- Dollar/Yen: ▼ 141.03 yen from 142.33 yen
- Euro/Pound: ▲ 85.94 pence from 85.68 pence
- WTI Crude: ▼ 1.7% at $62.91 per barrel
- Brent Crude: ▼ 1.7% at $66.84 per barrel
- London – FTSE 100: Closed for a holiday
- New York – Dow Jones: Closed for a holiday