Gold prices soared to a new all-time high on Thursday as fears of a global trade war triggered by US President Donald Trump heightened the demand for the safe-haven metal. Spot gold reached a peak of $2,954.84 per ounce, before retreating slightly to $2,936.95 per ounce by 11:00 a.m. ET. Meanwhile, US gold futures climbed by 0.6%, reaching $2,955.50 in New York trading.
The surge in gold prices followed Trump’s threat of imposing fresh tariffs on key sectors, including lumber, cars, semiconductors, and pharmaceuticals on Wednesday. Since assuming office, Trump has already enacted a 10% tariff on Chinese imports and a 25% tariff on steel and aluminum.
Peter Grant, vice president and senior metals strategist at Zaner Metals, noted that the ongoing trade tensions were fueling concerns about inflation and economic growth, which continued to support interest in gold as a safe-haven asset.
Strong Outlook for Gold
The recent rally in gold prices comes amidst speculation that the US government may consider revaluing its bullion holdings to reflect current market prices, as opposed to the price set back in 1973. However, this idea was quickly dismissed by US Treasury Secretary Scott Bessent, leading to some profit-taking in the market. Ole Hansen, head of commodities strategy at Saxo Bank, mentioned that while profit-taking was expected, the underlying support for gold remained strong.
Gold has gained 12% so far this year, continuing its upward trajectory after a 27% surge in 2024, driven by growing concerns over Trump’s disruptive trade and geopolitical agendas. Goldman Sachs raised its year-end target to $3,100 per ounce, citing stronger-than-expected central bank buying as a key driver for gold prices.
Potential Geopolitical and Inflationary Risks
In addition to trade tensions, there have been growing concerns that Trump might reduce American support for Ukraine after Russia’s invasion of its neighbor three years ago. While a potential peace deal may temporarily ease geopolitical tensions, it could weigh on gold prices in the short term. Grant from Zaner Metals stated that despite potential fluctuations, gold’s all-time high could hold for weeks, as there are sufficient fundamental factors supporting the price.
Additionally, the Federal Reserve’s meeting minutes released on Wednesday showed that Trump’s policies had raised concerns about inflation, which reinforced the central bank’s stance on holding off on further rate cuts. This further supported the appeal of gold as a hedge against inflation.
Increased Gold Exports
Data also revealed that gold exports from Switzerland to the US surged in January, reaching the highest level in at least 13 years. This increase in exports highlighted the continued demand for gold from investors seeking protection from economic uncertainties.
Conclusion
Gold continues to shine as a safe-haven asset, setting new records amidst concerns over global trade tensions and geopolitical risks. With strong demand from central banks and geopolitical factors supporting gold’s appeal, the outlook for the precious metal remains positive, even as profit-taking temporarily impacts prices. Investors and analysts alike will be closely monitoring the market for further developments, as gold is expected to remain a key asset in navigating economic uncertainties.
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