Gold Prices Surge to New Record Amidst Geopolitical Uncertainty and Inflation Concerns
Gold rallied to an all-time high on Thursday, approaching the $3,000 milestone, driven by ongoing geopolitical risks, trade tensions, and indications from US President Donald Trump regarding the verification of the nation's gold reserves.
Gold futures (GC=F) reached an intraday peak of $2,973 per ounce before settling at $2,944.30 (-0.40%) as of 6:53:16 AM EST. Meanwhile, cash market gold surpassed $2,954 an ounce, marking a new record.
The surge is attributed to increasing trade war concerns following Trump's announcement of levies on autos, semiconductors, and pharmaceuticals. Analysts anticipate retaliatory measures from other nations, potentially exacerbating inflation and driving demand for safe-haven assets like gold.
"The disruptive nature of tariffs will likely intensify economic growth concerns and heighten inflation risks, fueling gold purchases as a hedge," noted JPMorgan analysts.
Uncertainty surrounding peace negotiations between Ukraine and Russia also contributed to the gold price increase. Trump's remarks hinting at reduced support for Ukraine added to the market's unease.
Further fueling speculation on higher gold prices are Trump's comments on verifying the gold reserves stored at Fort Knox. This raises questions about whether the US will revalue its gold holdings, which could increase transparency and drive up prices.
Goldman Sachs analysts expect central bank demand, particularly from China, to structurally increase the gold price to $3,100 per troy ounce by 2025. However, policy uncertainty and trade tensions could push prices as high as $3,300/toz by year-end, according to the strategist.