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Donald Trump has kept to his bold policy promises on his first day back in office – confirming his intention to slap tariffs on China, Mexico and Canada. Trump sees these tariffs as a way to lower the budget deficit and improve national security.

This move poses a threat to global supply chains, especially American businesses that are reliant on imports. However, tarrifs aren’t a new concept at all; being utilished by President Trump extensively during his first term. They were used not only as a bargaining chip in the trade war against China, but was also used for imports restrictions on the basis of national security.

What tariffs means is uncertainty for the market and theres nothing investors dislike less than that. This naturally leads to the increase in demand for safe assets such as Gold while waiting for the market volatility to subside. Furthermore, since gold is priced against the dollar globally, the attractivness gold will increase for foreign investors should the dollar depreciate. The last few days have seen a spike in gold prices, as shown in the chart below.

This trend was also seen during Trump’s first term, leaving gold prices at all time highs. Over the past year, gold prices have performed significantly better than the S&P 500. Investors should not see anything different in this run as gold prices begin assuming a bullish stance. However, remember for to your due diligence before investing.