Gold prices surged above $3,000 for the first time on Friday, driven by heightened demand for safe-haven assets amid President Donald Trump’s trade wars. Meanwhile, stock markets rebounded, bolstered by optimism that US lawmakers would avoid a government shutdown.
Major US indices opened higher and remained in positive territory throughout the day, brushing aside a weaker-than-expected reading on US consumer sentiment.
European markets also gained momentum after Germany moved closer to approving a significant infrastructure and defense spending initiative.
In Washington, Senate Democratic leader Chuck Schumer dropped his earlier threat to block a Republican spending bill just hours before a key deadline to pass it. The package would fund the government through September, but Democrats had faced pressure from their supporters to reject the plan, which they criticized for including harmful spending cuts.
Patrick O’Hare, an analyst at Briefing.com, noted that stock markets drew support from “a growing sense that a government shutdown will be averted after Senator Schumer announced he would vote in favor of the House-passed continuing resolution.”
A consumer sentiment survey by the University of Michigan revealed that Americans’ expectations for the future had “deteriorated,” with many citing “a high level of uncertainty around policy and other economic factors.”
In Europe, both Paris and Frankfurt experienced gains after a previous day of losses tied to concerns over US tariff threats. Germany’s likely next chancellor, Friedrich Merz, announced that his conservative party had reached an agreement with the Greens to boost defense and infrastructure spending, clearing the way for the plan’s approval in parliament.
Jochen Stanzl, an analyst at CMC Markets, remarked, “Germany is set to implement critical structural reforms while hoping for an end to the economic downturn. Investor sentiment shifted dramatically today.”
Gold hits $3,004 amid rising trade war fears
Gold, traditionally a safe-haven asset during times of uncertainty, reached $3,004 per ounce before pulling back slightly to just under $3,000. The precious metal’s rally was fueled by growing demand as trade tensions and recent stock market volatility heightened investor concerns.
Fawad Razaqzada, an analyst at City Index and Forex.com, said, “Gold was boosted by increased haven demand amid risks associated with the trade war and ongoing stock market fluctuations.”
In the latest escalation, President Trump threatened to impose 200% tariffs on wine, champagne, and other alcoholic beverages from the European Union, further stoking fears of a prolonged trade conflict.
Wall Street has been under pressure in recent sessions due to trade tensions, with the S&P 500 falling into a technical correction on Thursday after dropping more than 10% from its record high just a month ago.
Despite a 2.1% daily gain, the broad-based S&P 500 ended the week down 2.3%, closing at 5,638.94.
Some analysts cautioned that Friday’s market rebound might be short-lived.
“Recent rallies have been short-lived, often succumbing to heavy selling pressure,” said Nathan Peterson, an analyst at Charles Schwab. “Ongoing tariff escalations, the looming threat of a government shutdown, and persistent concerns over economic growth driven by trade policy make it hard to maintain momentum.”
Corporate News: Kering, BMW struggle amid trade woes
In company-specific news, shares of Kering, the parent company of Gucci, plunged more than 11% in Paris after the luxury group appointed a new creative director for its struggling flagship brand. Meanwhile, shares of German automaker BMW dropped as the company warned that trade tensions between the US, Europe, and China would cost it $1 billion this year.
Key market data (as of 2040 GMT)
- New York
Dow: +1.7% at 41,488.19
S&P 500: +2.1% at 5,638.94
Nasdaq Composite: +2.6% at 17,754.09 - London
FTSE 100: +1.1% at 8,632.33 - Paris
CAC 40: +1.1% at 8,028.28 - Frankfurt
DAX: +1.9% at 22,986.82 - Tokyo
Nikkei 225: +0.7% at 37,053.10 - Hong Kong
Hang Seng Index: +2.1% at 23,959.98 - Shanghai
Composite: +1.8% at 3,419.56
Currency and commodities:
- Euro/Dollar: $1.0884 (up from $1.0852)
- Pound/Dollar: $1.2936 (down from $1.2952)
- Dollar/Yen: ¥148.62 (up from ¥147.81)
- Euro/Pound: 84.14 pence (up from 83.79 pence)
- Brent Crude: $70.58 per barrel (+1.0%)
- West Texas Intermediate: $67.18 per barrel (+1.0%)
