The impact of US trade policy on precious metals – analysis

Precious metals are influenced by a variety of factors, including geopolitical events, economic policies and market sentiment. In this article, we will examine the impact that US President Donald Trump’s second term in office has had on gold, silver and platinum, which are the three most important precious metals.

Gold is purchased mostly for investment purposes, with only about 10% of gold used for industrial purposes. Investors generally will purchase gold in order to diversify risk, as gold often moves in the opposite direction of traditional investments, such as equities or bonds.

Gold is viewed as the ultimate safve-haven asset, which are financial instruments that retain their value or even appreciate during economic downturns. Historically, gold has done well in times of market crises. This has been the case in 2025 as well, as gold continues to hit new records as the global financial markets have sustained massive selloffs due to Trump’s tariff policy.

Gold prices fell after Donald Trump’s election victory in November 2024 but have shown sharp gains in Trump’s second term as president. On Inauguration Day (Jan. 20, 2025), gold was trading at $2707 per ounce and had jumped $3245 per ounce on April 14, 2025, an all-time record.

This impressive gain of 19.8% in less than three months has been largely driven by the escalating trade war between the US and China which has dampened the outlook for global trade.

The US and China have been engaged in a battle of tariffs and counter-tariffs, with the US imposing a tariff rate of 145% on Chinese goods and China retaliating with 125% tariffs on US products.

There are increasing fears that the trade war with China could tip the US economy into a recession. Global stock markets have been swinging wildly, with massive selloffs after the latest US tariffs took effect in April 2025, followed by sharp gains just days later when the Trump administration announced that reciprocal tariffs would be lowered to a 10% baseline for all countries except China for 90 days. The volatility in the markets has sapped risk sentiment, and investors have flocked to safe-haven assets such as gold.

Will the US and China hammer out a deal, or will the tariff battle continue between the world’s two largest economies? If there are negotiations between the two sides, investor sentiment will improve, and gold prices will likely drop. Conversely, if US tariffs remain in place against China and other US trading partners, investors will remain averse to risk, and gold should continue to shine. Many economists expect the safe-haven flows to continue and for gold to set new record highs. Goldman Sachs has projected that gold will rise to $3880 an ounce by the end of 2025.

Silver, like gold, is considered an effective hedge against inflation. As with gold, silver has shown significant volatility in President Trump’s second term. However, unlike gold, silver has a key function as an industrial metal, such as in the use of electronics and photovoltaics (the conversion of sunlight into electricity). More than half of the global demand for silver is for industrial purposes, which means that silver is sensitive to industrial demand.

Silver often moves in the same direction as gold, but that hasn’t been the case over the past few weeks. Silver is down about 5% in April 2025 and was down as much as 20% in April before recovering. This is a sharp reversal from March when silver jumped 9.4%.

The reason for the slide is a concern that the latest round of US tariffs will likely reduce the industrial demand for silver. If the global trade war continues to escalate, demand for silver will fall and the price of silver will decline. This is the opposite of the scenario for gold, which has benefited from its role as a safe-haven during times of crisis and has posted strong gains due to the current turmoil in the financial markets.

The US-Canada-Mexico Free Trade Agreement (USMCA) governs one of the largest free trade blocs in the world. US tariffs on products from Mexico and Canada and counter-tariffs on US products have escalated trade tensions between the US and its northern and southern neighbors. The US has not imposed tariffs on goods that are compliant with USMCA, while non-compliant goods have been tariffed at 25%.

The US-Canada-Mexico silver trade relationship has been described as a “silver ecosystem” which is threatened by the US tariffs against its northern and southern neighbors. The US imports around 70% of its silver from Canada and Mexico, and US tariffs will drive the price of silver higher.

President Trump’s tariff policy has been characterized by a rash of reversals, suspensions and retreats, creating confusion for exporters, importers or investors trying to keep track of the current rate of US tariffs.

Platinum is a precious metal that is much more scarce than gold or silver. Industrial and automotive demand accounts for about 70% of platinum use, with the rest used for jewelry and investment purposes. About 85% of platinum production is mined in South Africa (70%) and Russia (15%), which means that supply shocks can trigger a spike in prices.

Platinum prices have been relatively stable in Trump’s second term, with less volatility than exhibited by gold or silver. Although it is a precious metal, platinum is not as reliable a safe haven as gold, as its industrial uses mean that its price generally moves with the economy, which is the opposite of a safe haven.

If the global trade landscape continues to deteriorate due to the US tariffs, demand for platinum will likely fall which would put downward pressure on prices.