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Table of Contents
Gold the Safe Haven
Bullion climbed more than 6.5 per cent by Friday’s close, hitting a new high of $3,237 per troy ounce – the biggest weekly gain since the early stages of the Covid-19 pandemic in March 2020. A broad sell-off in US equities and Treasuries has shaken confidence in US assets, prompting investors to seek safety in gold Trump exempts smartphones, other electronics from Chinese tariffs. The decision to withdraw the move was disclosed in a late Friday filing with Customs and Border Protection. The Trump administration has excluded smartphones from its intensifying “reciprocal” tariffs as it struggles to calm global markets by softening its approach to the multi front trade war launched by the president. The exemption marks the first indication of a potential easing in Trump’s tariffs on China.
Gold has had its best week in the past five years; it is hitting record highs as investors rush to one of the few safe havens left in global markets in the wake of Donald Trump’s tariff onslaught. Retail investors were the biggest buyers of gold in 2024, with their gold purchases accounting for a quarter of total demand of 4,553 tons last year, ahead of central banks. Gold purchases tend to increase when investors worry about the system breaking down. It’s not surprising that the safe haven of US Treasuries, or just holding US dollars in cash, is not as attractive as it has been in past crises. Gold, along with the yen and Swiss franc are the three biggest safe havens being bought in the havoc created by the Trump tariffs and the general chaos of reversals/rollbacks and policy announcements.
Taiwan and Iran Has Started Talks on Tariffs
Iran and US hold ‘positive’ talks in Oman, agree to resume next week. Taiwan holds first tariff talks with United States. Taiwanese officials held their first tariff talks with US officials on Friday, with both sides hoping for further discussions soon, the island’s government said on Saturday.
While Taiwan, a major semiconductor producer facing 32% tariffs, complained this was unfair, it moved quickly to lay out proposals with the United States, offering a zero-tariff arrangement and more purchases and investment in the country. Taiwan, home to the world’s largest contract chipmaker, TSMC, has long sought a free trade deal with the United States, its most important international supporter and arms supplier, even though the two have no formal diplomatic ties.
US Consumer and Inflation Sentiments
US consumer sentiment fell sharply in April and 12-month inflation expectations rose to the highest level since 1981, amid rising trade tensions that have stirred turmoil in financial markets and raised the risk of recession. Consumers’ 12-month inflation expectations rose from 5.0% in March to 6.7%, the highest since 1981. The jump, which marked four consecutive months of increases of 0.5 percentage points or more, was across party affiliation. Over the next five years, consumers saw inflation running at 4.4%. That was the highest level since June 1991 and was up from 4.1% in March. A persistent rise in inflation expectations could be problematic for US central bank officials.
Currency, Bond Yield and Equity Action
The dollar hit a decade low against the Swiss franc and was at its weakest in three years against the euro on Friday. The yield on the benchmark U.S. 10-year Treasury rose and was on track to post the biggest weekly rise in more than 23 years. Investors withdraw heavily from U.S. bond funds in the week ended April 9 Investors made a net withdrawal of $15.64 billion from U.S. bond funds during the week, the largest amount for a week since Dec. 21, 2022. Investors withdrew heavily from U.S. bond funds in the week ended April 9. Equity funds saw an inflow of $6.44 billion, shifting from the previous week’s net outflow of $10.83 billion. As global sentiment turned sour and equity prices fell, low-cost index fund investors bought the dip, driven by a ‘buy and forget’ mentality and the belief that timing the market is nearly impossible.
U.S. Core PCE Index Forecast
Economists forecast the core PCE price index rose 0.1% in March after jumping 0.4% in February. This would slow the annual increase in core inflation to 2.6% from 2.8% in February. The U.S. March inflation number may not be extended into April and beyond because of the uncertain but upward impact of the Trump tariffs.
Conclusion and disclaimer
The content on MarkShala.com is intended for educational and informational purposes only. We specialize in writing blogs on financial planning, investment strategies, economic trends, and related topics. While we strive to provide accurate and reliable information, the content should not be taken as professional financial, investment, or legal advice.
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