Gold prices have broken records, trading at over $2,900 per troy ounce in the first month of President Trump’s second term. This surge is driven by fears of trade wars and potential tariffs, which are seen as a threat to inflation and economic growth. Strategists predict more gains ahead, with many forecasting a price rise to $3,000 per ounce by the end of the year.
Investors are flocking to gold, considered a haven asset, in search of assets that are uncorrelated to other markets. However, some experts argue that gold is not the perfect hedge against inflation and economic uncertainty. Trade wars have led to fears that tariffs may be applied directly to gold imports, causing stockpiling in the United States.
The price gap between New York and London has also widened due to increased demand linked to fears of potential tariffs. This has led to long waits for moving gold out of British vaults, with some traders having to wait days or even weeks to get their bars out. The slow process is causing bottlenecks in the market.
Central banks have been buying more than 1,000 metric tons of gold each year, driving up demand and putting upward pressure on prices. This trend is expected to continue, with Goldman Sachs forecasting a price rise to $3,100 per ounce this year. For some central banks, these purchases are a way to diversify their reserves and reduce reliance on dollars.
The surge in gold prices has been driven by concerns over trade wars and potential tariffs. Investors are seeking safety and security in the face of global uncertainty. As one expert noted, “Trade war looming? Buy gold.” The price of gold is expected to continue its upward trajectory as investors seek assets that are uncorrelated to other markets.
Source: https://www.nytimes.com/2025/02/21/business/gold-price-trump.html