Gold faces a near 3% drop from Monday's all-time high with markets at unease over tariffs

LONDON (February 28) Gold’s price (XAU/USD) is getting knocked out and is facing a substantial 3% loss since it printed a new all-time high at $2,956 on Monday at the start of this week. The precious metal currently trades at $2,860 at the time of writing, after United States (US) President Donald Trump reiterated that tariffs for Mexico and Canada will start on March 4, while China will see an additional 10%, raising the total rates to20% on imports into the US. This dampens hopes markets still had for a possible delay in the implementation of these tariffs. 

Meanwhile, China is set to retaliate and it is ready to hit back at Trump’s trade tariffs, raising the risk of a tit-for-tat trade war between the two big economies. “If the US insists on having its own way, China will counter with all necessary measures to defend its legitimate rights and interests,” a spokesperson for the Chinese Ministry of Commerce said this Friday.

Daily digest market movers: What if yields surge again?

• Gold ETF’s (Exchange Traded Fund) are the sweet spot in China this year. Funds are swelling as the metal sets records, investors seek alternative assets, and local rules are tweaked to allow greater access. Onshore fund holdings increased by 17.7 tons in the first three weeks of February, close to the monthly record inflow of 20.9 tons set last October, according to data from the producer-funded World Gold Council, Bloomberg reports. 
• In early European trading, the risk-off mood this Friday is seeing deep losses with indices in Asia booking multiple percentage losses near their closing bell. European ones are facing losses of over 1% intraday. 
• The CME Fedwatch Tool sees chances for a June rate cut increase even further than Thursday. Odds are growing to a 71.8% chance approx for a rate cut against only 28.1% for keeping rates unchanged. 

FXStreet