Americans are clamouring for Australian gold and regard it as a safe haven bet against Donald Trump’s trade war.

The gold price hit a new record high of $US2,992 an ounce on Friday afternoon, with the value of the commodity soaring as new American import tariffs caused global share markets to plunge.

Gold is Australia’s second biggest export to the US after meat, and was a reason why Australia had a rare monthly trade surplus with the United States in January.

AMP chief economist and head of investment strategy Shane Oliver said Americans clamoured for gold imports, fearing the Trump Administration would put a tariff on that too.  

‘Basically, gold imports were sucked into the US with investors fearing tariffs on gold,’ he told Daily Mail Australia.

‘They were buying gold as a safe haven, there was also concern that Trump would put a tariff on and so there’s a lot of demand – there was a rush to export gold to the US, to get in ahead of those tariffs.

‘Gold has gone to a record high, it’s proven one of the best safe havens during this correction.

‘Historically, it is a safe haven: often when investors are worried about geopolitical risk, gold goes up.’ 

Americans are clamouring for Australian gold and regard it as a safe haven bet against Donald Trump 's trade war

Americans are clamouring for Australian gold and regard it as a safe haven bet against Donald Trump ‘s trade war

Gold made up 14.9 per cent of Australian exports to the US in 2024, in a trade worth $3.6billion. 

Since the start of March, the price of gold has climbed by 4.1 per cent while the Australian share market’s benchmark S&P/ASX200 has fallen by 5.6 per cent.

The American S&P500 has dropped by 7.3 per cent during the same period. 

Dr Oliver feared the Australian share market, by mid-year, would be 15 per cent below its February peak, having fallen by 9.1 per cent since then.

‘The trigger has basically been the tariffs and the erratic way in which they have been announced which has added to uncertainty,’ he said. 

The Trump Administration this week applied 25 per cent tariffs on Australian steel and aluminium.

Additional tariffs on Australian agricultural and pharmaceutical exports to the US are due to come into effect on April 1 if no exemption is negotiated.

Dr Oliver said Trump would be unlikely to slow down his application of new tariffs until the American share market had fallen by 20 per cent, as was the case in 2018 during his first administration.

The gold price hit a new record high of $US2,988 an ounce on Friday, with the value of this commodity soaring as new American import tariffs have caused global share markets to plunge (pictured is gold from the Perth Mint)

The gold price hit a new record high of $US2,988 an ounce on Friday, with the value of this commodity soaring as new American import tariffs have caused global share markets to plunge (pictured is gold from the Perth Mint)

‘He goes quieter on the tariffs, stops ramping them up, that’s what I think would happen,’ he said.

Higher inflation, as a result of the import tariffs, would also make it harder for the US Federal Reserve to cut interest rates. 

‘I reckon at some point, Americans will be paying more at Walmart and elsewhere when they buy their stuff,’ Dr Oliver said.

‘That could potentially mean that the Fed can’t cut interest rates for a while and the US economy is going to slow down.

‘And US politicians will start putting pressure on Trump and then if the share market is down 15 per cent plus, down 20 per cent maybe, he’ll start thinking, “This isn’t so good, maybe I’d better start cutting some deals so I can bring the tariffs back down a bit”.’ 

But widespread American tariffs could also see the Chinese flood Australia with cheaper electronic goods, considering imports from there don’t incur tariffs by virtue of a 2015 bilateral free trade deal.

‘Other countries will have many more things to sell because they won’t be going to the US,’ Dr Oliver said. 

‘A lot of it would be electronic products.’ 

China could also end up selling more steel and aluminium to Australia, to get around the American tariffs, putting more pressure on local producers, including the troubled Whyalla steelworks and Tomago Aluminium. 

‘Yes, we could get the benefit and the downside of cheaper products coming into Australia, good news is we might get more cheaper products from China but by the same token, that could be competitive pressure for some of our industries,’ he said.

‘China does sell some aluminium to the US, some of that could come our way, providing a double whammy for our producers here.’ 

Australian aluminium makes up just two per cent of American imports of the lightweight metal, calling into question US Commerce Secretary Howard Lutnick’s assertion that Australia was dumping aluminium below cost.

‘We’re like a tiny fraction: how can we be killing the US aluminium market? We’re only two per cent of their aluminium imports, it’s just ridiculous comments,’ Dr Oliver said.  

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