Gold Surges to New Record as Tariff Threats Intensify
Market Overview
Gold surged above $2,900/ounce, hitting a new all-time high on Monday amid escalating tariff threats. Gold futures climbed over 1.6%, reaching approximately $2,935 after setting previous highs last week.
Trade Tensions
President Trump announced plans to impose 25% tariffs on all imports of steel and aluminum into the United States, along with existing duties. He also stated intentions to unveil a retaliatory tariff plan against countries imposing levies on US goods. Tariffs on select Chinese goods went into effect last Tuesday.
Analyst Sentiment
Wall Street analysts remain bullish on gold amidst rising tariff threats. UBS Global Wealth Management's Solita Marcelli recommends a 5% allocation of gold in balanced portfolios. Goldman Sachs analysts reiterate their bullish outlook, citing heightened demand driven by escalating tariffs.
Central Bank Demand
Central banks have been major buyers of gold, contributing to its surge in demand. The World Gold Council reports that central banks continue to acquire gold at a rapid pace, driven by concerns over inflation, geopolitical tensions, and diversification needs.
ETF Inflows
Lower interest rates from the Federal Reserve have promoted inflows into physical-backed gold exchange-traded funds (ETFs).
Market Outlook
Despite potential short-term fluctuations, analysts believe tariffs will continue to drive gold prices higher. JPMorgan analysts foresee a potential downside if tariff uncertainty subsides, but emphasize the medium-term bullish outlook due to disruptive trade dynamics.
Gold Performance
Year-to-date, gold has gained nearly 10%, following a 27% rise in 2024.