Central banks around the globe have accelerated their gold purchases, propelling the precious metal to unprecedented heights. This surge comes as geopolitical tensions and economic uncertainties trigger shifts in global markets. The United States, grappling with increased jobless claims and imminent tariff implementations, finds itself at the center of these economic tremors.
In the latest data, U.S. jobless claims soared to a seasonally adjusted 242,000 for the week ending February 22, marking an increase of 22,000 from the previous week's revised figures. This surpasses the Dow Jones estimate of 225,000, raising concerns about the state of the labor market. The current figures represent the highest level of jobless claims since early October, highlighting potential vulnerabilities in the U.S. economy.
Canada and Mexico, two of the largest exporters of gold to the United States, are bracing for the impact of new tariffs. President Donald Trump confirmed that he would implement tariffs on these countries, with a proposed 25% levy set to take effect on March 4. Additionally, Trump has threatened a 25% tariff on the European Union and an extra 10% levy on China, compounding existing tariffs. These moves have sparked apprehension among traders and investors.
The threat of tariffs on gold has led U.S. banks and investors to reposition their gold reserves into the Commodities Exchange Centre and other secure vaults in New York. This strategic shift aims to mitigate potential disruptions in the gold supply chain caused by impending trade restrictions.
"There are concerns that imminent tariffs on Canada and Mexico will affect both gold and silver," said Nicky Shiels, head of metals strategy at MKS Pamp.
The stock market has reacted sharply to these developments. The S&P 500 declined by 1.59%, the Dow Jones Industrial Average fell 0.45%, and the Nasdaq Composite dropped 2.78%. These indices reflect investor anxiety over the economic implications of new tariffs and export controls.
In technology news, Big Tech companies continue to adjust their workforce in response to evolving market conditions. Google has informed employees of planned layoffs within its "People Operations" and cloud units. This announcement follows similar moves by other tech giants such as Meta and Microsoft earlier this year.
On a related note, Nvidia shares suffered a significant blow, plummeting 8.5% on Thursday. This decline erased $273 billion in market value as concerns about potential tariffs on chips from Taiwan intensified. Nvidia relies heavily on Taiwan Semiconductor Manufacturing Company (TSMC) for its chip production, making it particularly vulnerable to any disruptions in this supply chain.
Meanwhile, Bitcoin experienced a decline of 3.45%, trading around $80,500 in early Asia trading. This marks a nearly 25% drop from its all-time high reached in mid-December, reflecting broader market volatility.