Gold Hits Record High as Markets React to Trump's Tariff Announcement

Photo : Reuters

Washington: The global financial markets saw major changes after US President Donald Trump announced new tariffs on imports. Stock markets fell sharply, government bonds became more popular, and gold prices hit an all-time high as investors sought a safe place for their money.

Trump revealed a 10% tariff on all imported goods, with much higher rates for certain countries, particularly in Asia. The news immediately affected global markets, causing uncertainty among traders.

Stock Markets Drop
US stock market futures saw a steep decline late Wednesday after the tariff announcement. On Thursday, Australian stocks opened in negative territory, being one of the first markets to react. Asian markets also braced for losses as global trade and supply chains were disrupted by the sudden tax increases.

The Nasdaq futures fell 4%, with the tech sector taking the biggest hit. This was because China, a major manufacturing hub, faced a hefty 34% tariff on top of an earlier 20% tax. Tech giant Apple’s shares dropped nearly 7% in after-hours trading.

S&P 500 futures slid 3.3%, while Japan’s Nikkei futures declined over 4%. The US dollar rose against most currencies, except for the Japanese yen, which strengthened to 148.15 per dollar as investors looked for safer options.

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Australian blue-chip stocks fell by nearly 2%, and the benchmark ASX200 index, which tracks the top 200 companies in Australia, declined by 1.96% within the first 20 minutes of trading. The energy and financial sectors were among the hardest hit.

At a press conference, Trump specifically mentioned Australia’s beef industry, indicating that its exports would be affected.

Japan also suffered from the new tariffs, with a 24% tax imposed on its goods. Tokyo’s Nikkei index fell over 3% in early Thursday trading. The broader Topix index also dropped by 3.32%. Meanwhile, Vietnam’s stock market saw heavy selling, with Van Eck’s Vietnam ETF plunging over 8% in after-hours trading.

Gold Prices Surge
Gold prices reached a new record as traders rushed to buy the precious metal, often considered a safe investment in times of uncertainty.

Oil Prices Decline
Oil prices fell by $2 per barrel on Thursday after Trump’s tariff announcement. Investors worried that the trade war could reduce demand for crude oil.

Brent crude futures declined by $1.97 (2.63%) to $72.98 per barrel, while US West Texas Intermediate (WTI) crude dropped by $1.98 (2.76%) to $69.73.

Earlier on Wednesday, oil prices had risen briefly, but they fell again after the tariff news. Brent crude settled at $74.95 per barrel, up 46 cents, while WTI crude finished at $71.71 per barrel, gaining 51 cents.

Currency Markets React
The Indian rupee weakened in the non-deliverable forward market on Thursday after Trump announced a 26% tariff on Indian imports.

The dollar-to-rupee exchange rate in the one-month non-deliverable forward market was between 85.86 and 85.90, suggesting the rupee could open 10-15 paisa lower when India’s onshore spot market opens.

The offshore Chinese yuan also dropped to a one-month low of 7.3482 per US dollar before recovering slightly to 7.32.

US equity futures tumbled, with Japan leading the decline in broader Asian stock markets. The US dollar weakened against some major currencies, while the euro remained stable.

New Tariff Policy
President Trump’s new tariff policy is one of the strictest in US history. The 10% baseline tariff on all imports will significantly impact global trade. Some countries are facing even higher tariffs, such as:

• China: 34%
• India: 26%
• Vietnam: 46%
• South Korea: 25%
• European Union: 20%
• Japan: 24%

Trump also closed a loophole that allowed small, low-value packages to be shipped from China tax-free. This change is expected to affect major Chinese online retailers.

Despite these high tariffs, Trump insisted he was being “very kind” and was only imposing half of what these countries charge the US on its exports.

Possible Countermeasures
Global trade partners are expected to retaliate with their own tariffs, which could increase prices for many products worldwide.

Analysts at investment firm Wedbush described the situation as "worse than the worst-case scenario" that investors had feared, especially for the technology industry, which relies heavily on supply chains in China and Taiwan.

Following the announcement, US interest rate futures soared as investors speculated that economic growth in the US might slow down. Some experts believe this could even lead to an economic recession.

Tony Sycamore, a market analyst at IG, warned, "These tariff rates are much higher than expected. If they are not reduced soon, the chances of a US recession will rise significantly."