The relentless rise of gold has taken prices of the precious metal above the psychologically key $3,000 per ounce mark for the first time, as geopolitical and economic uncertainty sent investors rushing into the safe-haven asset.
Spot gold hit a record $3,004.86 per ounce on Friday, marking its thirteenth all-time high in 2025. Prices have already climbed 14% this year, after surging 27% in 2024.
"With continued central bank buying, there are multiple factors driving demand. In a backdrop of geopolitical uncertainty and ongoing tariff changes, appetite for gold remains strong," said Standard Chartered analyst Suki Cooper.
Since the start of U.S. President Donald Trump's administration, protectionist policies have jolted global markets, with his tariffs triggering swift retaliation from China and Canada.
"With equity markets selling off and unpredictable political risks, we are starting to see a return of Western investors to gold, which could propel it to much higher levels," said John Ciampaglia, CEO of Sprott Asset Management.
"We consider gold as an 'insurance policy' and source of liquidity in difficult market environments."
Tariffs fuel inflation fears and trade tensions, driving investors to gold as a safe-haven hedge.
Meanwhile, gold stocks in COMEX-approved warehouses hit a record 40.56 million ounces, as traders rushed to cover positions amid tariff uncertainty. But inflows have slowed in recent weeks.
FEDERAL RESERVE
Traders are doubling down on U.S. Federal Reserve rate cuts, now expecting three quarter-point reductions this year, up from two just days ago.
The Fed has slashed rates by 100 basis points since September, pausing in January, but markets now anticipate cuts to resume in June. That is keeping the dollar under pressure, a stark shift from when Trump's protectionist policies strengthened the currency.
"The inflation data is helping to give the market confidence that the easing cycle will continue, given concerns around inflation and growth," said Standard Chartered analyst Suki Cooper.
ETF DEMAND
The SPDR Gold Trust (GLD), the world's largest gold-backed ETF, saw holdings rise to 907.82 metric tons on February 25, the highest since August 2023.
"There will likely be increased flows into safe-haven assets like gold, especially as investors move away from equity growth stocks amid rising uncertainties and future concerns," said Dina Ting, Head of Global Index Portfolio Management at Franklin Templeton.
She noted that while investment strategies vary, a 5% to 10% gold allocation can offer effective diversification.
CENTRAL BANK DEMAND
Gold's rise is getting another tailwind from central bank demand. Analysts say strong buying in 2025 could push prices to new highs as nations continue stockpiling the metal amid economic uncertainty.
"Central banks may ramp up gold purchases amid market uncertainties, not just to hedge against the U.S. dollar but to anchor their currencies to gold as well," Ting said.
In the absence of any improvement in the U.S. budget deficit, gold could challenge a high of about $3,500, Macquarie said in a note. Goldman Sachs raised its year-end 2025 gold target to $3,100.
Central banks snapped up over 1,000 tons of gold for the third year in a row in 2024, and in the final quarter of 2024 - as Trump's election win roiled markets - buying soared 54% year-on-year, according to a report from the World Gold Council last month.
