Gold Continues Rally Amidst Tariffs and Safe-Haven Demand
Gold is poised for its eighth consecutive weekly gain as investors seek refuge in the safe-haven asset. Geopolitical tensions and the trade dispute between the US and China have fueled demand for gold.
Gold futures (GC=F) retreated slightly from their all-time high, hovering near $2,950. Meanwhile, the spot price in London traded around $2,930 an ounce.
Gold has surged approximately 11% year-to-date, driven by central bank purchases, geopolitical risks, and ongoing trade uncertainties. President Trump's threat to impose tariffs on various goods has further boosted demand for gold.
Additionally, a significant price difference between gold futures in the US and the spot price in London has incentivized institutional investors to increase their physical gold holdings in New York. Gold inventories on COMEX have reached their highest level since the pandemic.
"There's concern that gold may not be readily available, driving up prices," said Brett Elliott, director of marketing at American Precious Metals Exchange (APMEX).
Central bank demand for gold hit a record high last year, with China emerging as the largest buyer. Despite the Federal Reserve's pause on rate cuts, Wall Street predicts further gains for gold this year.
Goldman Sachs analysts have raised their 2025 year-end forecast to $3,100 per troy ounce, citing strong central bank demand. They estimate that central bank purchases could add 9% to the gold price by year-end.
Meanwhile, a survey by BofA indicates that global fund managers believe gold will outperform US equities and could even surpass them in a "full-blown trade war" scenario.