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Takeaways
- Gold futures rose to $3,000 an ounce, a first in the history of gold futures, amid rising economic anxiety.
- Investors are concerned that President Trump's unpredictable tariff policies could help accelerate inflation while slowing growth.
- In recent weeks, gold and U.S. Treasurys have both surged amid a flight away from risk.
Gold futures have risen above $3,000 for the first-time as investors rushed to traditional safe-havens amid fears about trade wars and U.S. economy growth.
Gold briefly reached $3,016/oz early Friday, giving the metal a gain of almost 4% since the beginning the week. Meanwhile, the S&P 500 before Friday was on track to have its worst week in two years. Gold pared its gains and stocks rebounded during Friday's session.
This week, gold has risen for the same reasons that stocks have fallen. While recent data on inflation and employment indicate that the economy remains strong, investors are increasingly worried about President Trump’s unpredictable tariff policies which will increase costs and slow down economic growth.
Fear that the U.S. is headed toward a period of stagflation—the unlikely pairing of elevated inflation and sluggish growth—has sent investors into safe-haven assets like gold and U.S. Treasurys. Wall Street sees gold as a store of value that can protect against inflation and falling asset prices. Gold prices can rise when uncertainty is high, as was the case in the months leading up to November’s presidential elections
Treasury yields are also at play, and have fallen markedly over the last two month, a byproduct as well of investors’ flight to security. Treasury yields are inversely related to Treasury prices, meaning yields fall as demand for U.S. debt—the market’s closest thing to a risk-free asset—increases. Gold does not have a yield. Investors can only make money on gold when its price rises. Treasurys are less attractive than gold as yields decrease, which can contribute to the rise of gold.
