The price of gold has surged to record highs in early 2025, driven by investors seeking refuge from geopolitical and trade uncertainties. This surge has been further accelerated by recent policies from the Trump administration, pushing gold prices to unprecedented levels.
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Gold bars stacked on top of each other.
ING analysts recently revised their gold price forecast, predicting the precious metal will reach $3,000 per ounce this quarter. This figure was previously considered a year-end target by Wall Street. The current rally underscores gold’s traditional role as a safe haven asset in times of macroeconomic and geopolitical turmoil.
Trade Tensions Fueling Gold’s Rise
President Trump’s tariff strategies, including the recently announced and subsequently delayed tariffs on goods from Canada and Mexico, have significantly contributed to the escalating trade tensions. These actions have prompted investors to seek shelter in gold, as such steep tariffs could trigger inflationary pressures on the economy.
“The ongoing uncertainty surrounding trade and tariffs, even with the US reaching a deal with Canada and Mexico, will likely continue to support gold prices,” ING analysts commented. “Further escalation of trade tensions and retaliatory measures will only intensify the safe-haven demand for gold.”
A graph showing the increase in gold prices.
Beyond the immediate economic impact, tariffs also raise concerns about potential restrictions on access to physical gold, potentially driving up its price. While gold hasn’t been directly targeted by recent tariffs, there’s no guarantee it will remain exempt in the future. Considering that Mexico and Canada contributed significantly to US gold imports last year, any future tariffs involving these countries could significantly impact gold prices.
Geopolitical Uncertainty and Central Bank Buying Add to Gold’s Momentum
Further amplifying geopolitical uncertainty are President Trump’s remarks regarding the potential transfer of the Gaza Strip to the US. This, coupled with existing trade tensions, has created a perfect storm for gold’s price surge. The Financial Times reported a significant accumulation of gold in New York, driven by tariff anxieties, leading to shortages elsewhere and further supporting price increases.
ING’s revised gold outlook is echoed by UBS, which also raised its 12-month gold forecast to $3,000 per ounce. Both firms anticipate that the Federal Reserve will likely cut interest rates this year, potentially fueling inflation and further driving gold purchases.
Central banks globally continue to be major buyers of gold, utilizing it to diversify foreign reserves away from the US dollar. The World Gold Council reported that central bank gold purchases have exceeded 1,000 tons for the third consecutive year, with a substantial increase in the fourth quarter. This sustained demand from central banks provides a significant underpinning for the ongoing gold rally.
Conclusion: Gold Remains a Safe Bet in Uncertain Times
The confluence of trade tensions, geopolitical uncertainty, potential interest rate cuts, and sustained central bank buying paints a bullish picture for gold. As investors navigate a complex and volatile global landscape, gold’s appeal as a safe haven asset is expected to endure, potentially driving its price even higher in the coming months. The $3,000 per ounce mark, once a distant target, now appears increasingly within reach.
