Gold prices have spiked to record heights in 2025, propelled by economic uncertainty worldwide due to U.S. President Donald Trump's tariff policies. The precious metal has established itself as a safe-haven asset, with investors expressing worries about inflation, trade tensions, and the decline of the U.S. dollar. Nevertheless, the future of gold is not clear as market dynamics change.
Record Highs During Market Volatility:
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Gold hit a record high of $3,245.28 per ounce on April 11, up 28% since November 2024.
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The increase is due to investors fleeing the uncertainty created by Trump's intensifying trade war and unpredictable economic policies.
Impact of Tariff Policies:
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Trump's imposition of high tariffs—up to 145% on China—has dislocated global trade and increased economic uncertainty.
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Partial retreat to a baseline of 10% tariffs was unable to assuage market nerves, further enhancing the attractiveness of gold.
Gold's Safe Haven Function:
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Apprehension regarding U.S. Treasuries and the dollar as a global reserve currency has heightened gold's appeal.
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Central bank buying and robust demand from China have also buoyed gold prices, although elevated prices have cooled Indian consumer demand.
Market Reactions and Predictions:
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Goldman Sachs lifted its year-end gold price prediction to $3,700 an ounce based on strong central bank demand and ETF inflows.
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Experts add that gold prospers under low-interest-rate conditions and under periods of inflationary stress.
Challenges Ahead:
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Gold remains sensitive to trade tensions between the U.S. and China. Resolution could curtail its advance, while the extended tensions will likely drive prices higher.
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Higher prices could depress consumer demand in major markets such as India, which could have a bearing on long-term trends.
Sources: Reuters, Bloomberg, Zawya