U.S. President Donald Trump announced a 25% tariff on all imported steel and aluminum, escalating global financial market uncertainty and driving gold prices to new highs. Spot gold reached $2,930 per ounce, while gold futures hovered around $2,955 per ounce. Trump's executive order included no exceptions and suggested potential tariffs on automobiles, chips, and pharmaceuticals.
Gold prices have increased by 11% this year due to Trump's unpredictable trade and geopolitical policies, enhancing gold's appeal as a safe-haven asset. Westpac analyst Richard Franulovich noted that these policies increase gold's attractiveness as a hedge against market risks.
Investors are also assessing the potential impact of Trump's policies on U.S. monetary policy, especially if they lead to inflation and hinder economic growth. The Federal Reserve's stance on interest rates could further influence gold investment demand. Fed Chair Jerome Powell's upcoming testimony may provide insights into the Fed's rate path, with expectations that economic resilience may delay rate cuts.
The World Gold Council reported a record global gold demand of 4,975 tons in 2024, driven by central bank purchases and investment demand. Analysts predict continued gold price growth, with UBS, Citibank, and Goldman Sachs setting targets of $3,000 per ounce due to ongoing trade tensions and geopolitical uncertainties.
