Global financial markets opened the week in turmoil as escalating U.S. tariff threats fueled safe-haven demand, pushing gold to an unprecedented peak above $3,120 per ounce. The precious metal’s surge coincided with heightened geopolitical tensions and a cautious tone in equity futures, underscoring investor unease over potential trade disruptions.
Tariff Proposals Roil Markets
A Wall Street Journal report over the weekend revealed that U.S. President Donald Trump’s advisors are drafting plans to impose a sweeping 20% tariff on all imports, with details expected Wednesday. Additionally, Trump warned Sunday that secondary tariffs of 25%-50% could target buyers of Russian oil if Moscow undermines U.S. efforts to end the Ukraine conflict. These measures, framed as tools to protect domestic industries and address trade imbalances, have reignited fears of a global trade war.
Risk Aversion Spurs Market Moves
U.S. stock index futures slid 0.4%-1.2% Monday, reflecting risk-off sentiment. The U.S. Dollar Index edged lower to 103.80, retreating from recent gains as investors sought refuge in gold and yen. USD/JPY dropped 0.6% to 148.80, extending Friday’s losses, while safe-haven flows buoyed the Swiss franc, which strengthened 0.4% against the greenback.
Currency Dynamics and Economic Data
EUR/USD stabilized above 1.0800 after a volatile week, bolstered by stronger-than-expected German retail sales (+0.8% month-over-month in February). GBP/USD held firm at 1.2960, despite mixed momentum, while AUD/USD struggled below 0.6300 ahead of Tuesday’s Reserve Bank of Australia rate decision, where policymakers are widely expected to keep rates steady at 4.1%.
Upcoming Catalysts
Market focus will pivot to Wednesday’s U.S. tariff announcement and key economic indicators, including March’s Dallas Fed manufacturing survey and Chicago PMI. Meanwhile, Japan’s unemployment rate (Tuesday) and Eurozone inflation data (Thursday) could further influence currency trends.
Analyst Insight
“Tariffs remain a double-edged sword,” noted FX strategist John Smith. “While they aim to protect domestic sectors, the risk of retaliation and broader economic fallout continues to unsettle markets. Gold’s record rally reflects this uncertainty, as investors prioritize capital preservation over yield.”
As trade policy deliberations unfold, analysts caution that sustained tariff tensions could disrupt global supply chains, exacerbate inflationary pressures, and dampen growth prospects.
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