Cryptocurrencies saw a sharp decline amid escalating trade tensions after U.S. President Donald Trump imposed new tariffs on China, Canada, and Mexico. This decision reignited fears of a full-scale trade war, prompting investors to reduce exposure to high-risk assets, particularly digital currencies. As a result, Bitcoin dropped 10% to $91,695.8, while Ether suffered heavy losses of 22.7%, falling to $2,434.84.
The 25% tariffs on Canadian and Mexican imports, along with a 10% duty on Chinese products, further exacerbated geopolitical and economic tensions, with the affected countries vowing retaliatory measures. These developments quickly impacted financial markets, leading to a 1.5% decline in Wall Street futures, while investors flocked to the U.S. dollar as a safe haven, pushing it to a one-month high.
Meanwhile, gold prices retreated significantly, following the U.S. dollar’s surge to its highest level in a month, fueled by Trump’s tariff decision. Although the yellow metal lost some of its recent gains, its broader trend remains supportive, especially given the ongoing market volatility. Spot gold settled at $2,780.56 per ounce, while gold futures dropped to $2,810.30 per ounce, after hitting record highs last week.
Despite the current volatility, JP Morgan maintains its positive outlook on gold, projecting it to reach $3,000 per ounce by late 2025. Analysts at the bank believe that rising market risks and continued monetary easing will support gold’s upward momentum over the long term.
Analysts also warn that these tariffs could lead to higher import costs, driving inflation rates higher and increasing financial pressure on consumers and businesses. With growing concerns over economic slowdown, the Federal Reserve may be forced to reconsider its monetary policy, especially as markets had been anticipating interest rate cuts to support economic activity.
