Gold rose on Tuesday as geopolitical uncertainty underpinned safe-haven demand, while silver surged 8% to hover near all-time highs.
Spot gold climbed 1.6% to $5,092.70 per ounce, as of 0710 GMT, after scaling a record $5,110.50 on Monday. It broke through the $5,100 mark for the first time in the previous session.
U.S. gold futures for February delivery edged 0.1% higher to $5,088.40 per ounce.
"Trump's disruptive policy approach this year is playing into the hands of precious metals as a defensive play. The threats of higher tariffs to Canada and South Korea are doing enough to keep gold a safe-haven choice," said Tim Waterer, KCM Trade's chief market analyst.
Escalating trade tensions on Monday, U.S. President Donald Trump said he would raise tariffs on South Korean auto, lumber, and pharmaceutical imports to 25%, while criticising Seoul for failing to enact a trade deal with Washington. This was after he threatened tariffs on Canada in the backdrop of a thawing relationship with China, following Canadian Prime Minister Mark Carney's visit to the country earlier this month.
"(Gold's rally) points to a material geopolitical, or uncertainty premium now embedded in gold prices, driven less by cyclical factors and more by the persistent uncertainty around geopolitics, policy unpredictability and (loss of) confidence in the dollar," Christopher Wong, a strategist at OCBC said in a note.
A looming U.S. government shutdown and Trump's erratic policymaking pressured the greenback, making the dollar-priced gold cheaper for overseas consumers.
The Federal Reserve is expected to hold interest rates steady at its meeting beginning later in the day, amid the challenges posed by the Trump administration to U.S. central bank independence.
Spot silver jumped 6.1% to $110.19 an ounce, after hitting a record high of $117.69 on Monday. It has already surged more than 50% so far this year.
From a technical perspective, silver now appears expensive relative to gold, with the gold-to-silver ratio currently at a 14-year low, analysts at BMI, a unit of Fitch Solutions, said in a note.
With speculative buying leading the latest rally, BMI said, they now expect prices to ease in the coming months as supply tightness eases and industrial demand for silver starts to peak with a slowing Mainland Chinese economy.
Spot platinum tumbled 2.2% to $2,697.45 per ounce after hitting a record $2,918.80 in the previous session, while palladium added 1.1% to $2,004.37. - Reuters
