By Adrian Ash, BullionVault
GOLD PRICES rebounded and silver hit 2-week highs against the falling US Dollar on Tuesday as Western stock markets dropped again, 'peace' talks for Ukraine began in Saudi Arabia, and President Trump doubled import tariffs on Canadian steel and aluminum to 50% following trade-war retaliation from north of the border.
Gold priced in the Dollar reversed yesterday's drop of $35 per Troy ounce, trading as high as $2919 while silver spiked to $32.93 – the highest since 21st February – as the VIX index of US stock-market volatility edged up again to new multi-month highs.
Trump's move came after Doug Ford, Premier of Ontario, slapped a 25% charge on electricity exported from Canada's most populous province to 1.5 million homes and businesses south of the border, vowing to "increase this charge...if the United States escalates.
"I will not hesitate to shut the electricity off completely."
Canada's incoming prime minister Mark Carney – a former central-bank governor with no party political experience – meantime said overnight that he will fight back against the US trade tariffs "until Trump shows respect" instead of trying to "destroy the Canadian way of life".
The Dollar fell to new 4-month lows on its DXY index against the Western world's other major currencies.
Western stock markets fell faster, however, diving to the lowest since mid-September on the MSCI World Index.
New York's Nasdaq 100 index of US-listed tech shares fell another 0.7% to hit its own 6-month low.
European bourses lost 1.6% on the EuroStoxx 600 to trade 4.6% below last Monday's record high.
With the Euro now gaining almost 5.2% versus the greenback so far this month, gold priced in the 20-nation currency today rallied €10 from a new 6-week low of €2656 per Troy ounce.
The Euro's gain has been outpaced by the Swedish Krona, up 7.5% in less than a fortnight as its defense industry prepares to benefit from Germany's shock decision to borrow heavily and ramp up military spending.
"The effect [which Trump's] policy changes, in particular tariffs, will have on US growth and inflation expectations could not only affect real [interest] rates but also further incentivize global central bank purchases" of gold bullion, reckons analyst Trevor Yates at $98 billion ETF promoters Global X.
Already running above 1,000 tonnes in 2024 for the 3rd year running on some estimates, central bank gold buying has continued from China and surged from Poland so far in 2025.
Canada accounts for half of US aluminum imports, says global trade expert Brad Setser, "and the US market only really clears with Canadian supply.
"[So Trump's latest action] guarantees a lot of pain for US aluminum consumers."
Crude oil rallied from yesterday's new 3.5-year lows, taking European benchmark Brent up towards $70 per barrel.
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