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Gold Prices Reach New Peak Amid Trade War Concerns
Gold prices have surged to unprecedented levels, driven by escalating economic uncertainties stemming from President Donald Trump’s trade policies. Analysts widely attribute the precious metal’s ascent to its traditional role as a safe haven asset during times of global economic volatility. These concerns have been amplified by the ongoing trade wars initiated by the Trump administration, pushing investors towards the perceived security of gold.
Record High for Gold
Spot gold prices reached a record $3,084.4 per ounce on Friday morning, according to the World Gold Council. This signifies a remarkable increase of approximately 17 percent year-to-date in 2025 and a doubling in value since January of the previous year.
Trade Tariffs and Economic Instability
Experts largely attribute this sustained rally in gold prices to the economic instability triggered by President Trump’s imposition of new tariffs. These measures, intended to reduce the US trade deficit and bolster domestic manufacturing, have instead fueled concerns about broader economic repercussions.
US Trade Measures and Global Response
Since assuming office in January, the US government has implemented a 25 percent tariff on steel and aluminum imports. Furthermore, tariffs on Chinese goods have been doubled to 20 percent. Partial 25 percent tariffs have also been applied to products from Mexico and China, with plans to extend similar duties to imported vehicles and automotive components starting April 3rd.
These actions have triggered retaliatory measures from key trading partners. Canada has responded with tariffs on $84 billion of American goods, while the European Union has announced countermeasures valued at $22 billion.
Impact of Trade Disputes on Investment
The implemented tariffs have heightened anxieties regarding increased inflation, potential delays in interest rate reductions, and a slowdown in global economic expansion. Consequently, investors are increasingly turning to gold as a hedge against these heightened uncertainties.
The upward trajectory of gold prices is further supported by substantial inflows into gold-backed exchange-traded funds and consistent demand from central banks. This trend has been particularly pronounced since Russia’s invasion of Ukraine three years prior.
Central Banks’ Gold Accumulation
In 2024, central banks globally added 1,045 metric tons of gold to their reserves. Emerging economies, including Poland, India, and China, were the primary contributors to this accumulation. This marked the third consecutive year that central bank gold purchases have exceeded 1,000 tons annually.
Gold Price Forecasts and Future Outlook
Goldman Sachs, in a recent report, cited ETF inflows and ongoing central bank demand as reasons for raising its gold price forecast. The financial institution now anticipates gold to reach $3,300 per ounce by the end of the year.
Geopolitical Factors Influencing Gold
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, suggests that gold prices could climb further if ongoing geopolitical disputes in Europe and Asia remain unresolved.
According to Streeter, “While progress towards a ceasefire in Ukraine might moderate prices, instability persists in the Middle East.”
She also cautioned, “The potential for escalating geopolitical tensions exists as the US and Russia explore opportunities in the Arctic region.”
Furthermore, Streeter noted, “Increased assertiveness from China towards Taiwan could also propel further investment in the precious metal.”
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