Recently imposed tariffs on Chinese imports could push up inflation in the U.S., adding a tailwind to gold prices, this according to Frank Holmes, CEO of U.S. Global Investors.
“Historically when you look at tariffs, it’s a taxation, and that taxation is going to be picked up by the consumers in America, and so that’s going to be inflationary for buying products,” Holmes told Kitco News.
Gold has historically been a good hedge against inflation, and Holmes noted that this time around will not be any different.
In addition, lower rates from a more dovish Fed will also provide a boon for gold prices, Holmes said.
“Now we’re seeing rates are much lower than they were in October, and that is also a very supporting underbelly structure for the price of gold, and if you add inflation on that, gold in a near second is going to be $1,400,” he said.