• Gold prices hit a historic high, surpassing $2,900 per ounce for the first time, driven by escalating trade tensions, inflation fears and its status as a safe-haven asset during global uncertainty.
• Trade tensions and tariffs played a key role, with U.S. President Donald Trump’s announcement of new tariffs on steel and aluminum imports fueling market uncertainty and boosting gold’s appeal.
• Central bank demand surged, with a 54% year-on-year increase in gold purchases in late 2024, particularly from China, as countries diversified away from the U.S. dollar.
• Inflation and Federal Reserve policy are critical factors, with upcoming CPI and PPI data, along with Fed Chair Jerome Powell’s testimony, likely to influence gold’s trajectory.

Gold’s meteoric rise continued this week, with prices surging past the 2,900 mark for the first time in history. The precious metal’s rally, driven by escalating trade tensions and renewed fears of inflation, underscores its enduring role as a safe?haven asset in times of uncertainty. As of Monday, spot gold traded at 2,902.16 per ounce, up 1.4% for the session, while U.S. gold futures climbed to $2,929.60 per ounce. The catalyst? U.S. President Donald Trump’s announcement of fresh tariffs on steel and aluminum imports, coupled with plans to impose reciprocal tariffs later this week.

“Obviously the tariff war is behind the rise; it just reflects more uncertainty and more tension in the global trade situation,” said Marex analyst Edward Meir. This sentiment echoes across the market, as investors brace for the potential fallout of a renewed trade war.

A historical perspective: Gold’s resilience in turbulent times

Gold’s latest rally is not an isolated event but part of a broader trend that has seen the metal gain nearly 11% in 2025 alone, following a staggering 27% surge in 2024. Historically, gold has thrived in environments marked by geopolitical uncertainty, inflationary pressures and currency devaluation. The current scenario is no different.

The last time gold experienced such a dramatic ascent was during the 2008 financial crisis, when prices surged as investors sought refuge from collapsing markets. More recently, the COVID-19 pandemic in 2020 saw gold prices climb to then-record highs as central banks unleashed unprecedented monetary stimulus. Today, the combination of trade tensions, inflation fears and central bank buying has reignited gold’s appeal.

Central banks, in particular, have played a pivotal role in bolstering demand. According to the World Gold Council, central bank gold purchases surged 54% year-on-year in the final quarter of 2024, coinciding with Trump’s re-election. Notably, China’s central bank added gold to its reserves for the third consecutive month in January, signaling a strategic shift toward diversifying away from the U.S. dollar.

Tariffs and inflation: A double-edged sword

Trump’s latest tariff announcement—a 25% levy on all steel and aluminum imports—has reignited fears of a global trade war. Tariffs, while designed to protect domestic industries, often lead to higher consumer prices, exacerbating inflationary pressures. Investors are now closely watching U.S. inflation data, with the Consumer Price Index (CPI) and Producer Price Index (PPI) set for release later this week.

“If the inflation data surprise on the downside, it may weigh on the dollar and inflate gold prices, while an upside surprise could push up U.S. yields and strain gold, albeit mildly due to the market’s resilience and buyer interest during dips,” Meir noted.

The Federal Reserve’s stance on inflation will also be critical. Fed Chair Jerome Powell’s upcoming testimony before Congress, along with the release of the Federal Open Market Committee (FOMC) minutes, could provide further clues on the central bank’s policy trajectory. San Francisco Fed President Mary Daly recently emphasized the need for restrictive monetary policy, stating, “Policy needs to remain restrictive until…I see that we are really continuing to make progress on inflation.”

The road to $3,000: A matter of when, not if

With gold’s relentless rally, analysts are increasingly confident that the 3,000 milestone is within reach. “Gold is very clearly targeting the 3,000 level and the market is incredibly strong, almost relentless. Now it’s only a question of when it will scale the level and not if it will,” said independent analyst Ross Norman.

Goldman Sachs has even revised its year-end target for gold to $3,100, citing “structurally higher” central bank demand as a key driver. The investment bank projects a 9% upside for the metal, fueled by ongoing geopolitical tensions and inflationary pressures.

Phillip Streible, chief market strategist at Blue Line Futures, believes gold’s 45-degree rally since December could create a self-fulfilling prophecy, potentially pushing prices as high as 3,250 or 3,500. “One should expect to see retracement on profit-taking, but we never do, which reflects that the underlying momentum is very, very powerful,” Norman added.

A cautiously optimistic outlook

While gold’s rally is undeniably impressive, it is not without risks. A stronger-than-expected inflation reading or a hawkish shift from the Federal Reserve could temporarily dampen sentiment. However, the broader macroeconomic backdrop—marked by trade tensions, central bank buying and persistent inflation—suggests that gold’s upward trajectory is likely to continue.

For investors, gold remains a compelling hedge against uncertainty. As history has shown, the metal’s allure only grows stronger in times of crisis. Whether gold reaches $3,000 this year or next, one thing is clear: its role as a safe-haven asset is more relevant than ever. In a world fraught with uncertainty, gold continues to shine.

Sources include:

Mining.com

CNBC.com

FXstreet.com