Fueled by increased economic uncertainty stemming from the global trade war, demand for the precious metal gold has surged, with gold prices breaking the $3,000 per ounce barrier for the first time. This historic breakthrough reflects a widespread trend among investors seeking safe-haven assets during turbulent times.
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03-15, 2025Gold prices hit a record high of $3,004.86 per ounce last Friday, up 14% since the start of 2025. Gold is generally seen as a safer investment option, especially favored during times of economic instability. The escalating trade war between the United States and its major trading partners has disrupted financial markets and raised concerns about the global economy and consumer impact.
The imposition of tariffs on imported goods increases operating costs for businesses, which may ultimately be passed on to consumers, leading to higher prices. U.S. President Donald Trump has threatened tariffs of up to 200% on alcoholic products imported from the EU, further exacerbating trade tensions. This move is in response to the EU's planned 50% import tax on American whiskey, the EU's first retaliation against Trump's blanket tariffs on steel and aluminum imports from all countries into the U.S.
Standard Chartered precious metals analyst Suki Cooper stated, "Demand for gold remains robust against a backdrop of geopolitical uncertainty and ongoing tariff changes." Victoria Hasler, head of fund research at Hargreaves Lansdown, believes there are two main factors currently driving gold prices higher. She noted that Trump's tariff policies, social media pronouncements, and ongoing tensions in the Middle East and Russia/Ukraine all contribute to market uncertainty, and "markets hate uncertainty," which has propelled gold prices to new highs.
Ms. Hasler stated that another major driver is central bank purchases of gold, but the specific reasons for this are unclear. "Perhaps it is reasonable to speculate that at least part of the reason is that countries want to diversify their reserves and reduce their dependence on the dollar. The two drivers mentioned above remain in place and are unlikely to weaken in the short term." AJ Bell investment director Russ Mould cited data from the World Gold Council showing that central banks added approximately 1,045 tons of gold to their reserves last year, marking the third consecutive year of purchases exceeding 1,000 tons of gold. He believes we are in an "era where gold is really starting to shine."
