By
Reuters
Printed
March 16, 2025
The relentless rise of gold has taken costs of the dear steel above the psychologically key $3,000 per ounce mark for the primary time, as geopolitical and financial uncertainty despatched buyers dashing into the safe-haven asset.
Reuters
Spot gold hit a file $3,004.86 per ounce on Friday, marking its thirteenth all-time excessive in 2025. Costs have already climbed 14% this 12 months, 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,” mentioned Normal Chartered analyst Suki Cooper.
Because the begin of U.S. President Donald Trump’s administration, protectionist insurance policies have jolted international markets, together 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,” mentioned John Ciampaglia, CEO of Sprott Asset Administration.
“We consider gold as an ‘insurance policy’ and source of liquidity in difficult market environments.”
Tariffs gasoline inflation fears and commerce tensions, driving buyers to gold as a safe-haven hedge. In the meantime, gold shares in COMEX-approved warehouses hit a file 40.56 million ounces, as merchants rushed to cowl positions amid tariff uncertainty. However inflows have slowed in current weeks.
Merchants are doubling down on U.S. Federal Reserve fee cuts, now anticipating three quarter-point reductions this 12 months, up from two simply days in the past.
The Fed has slashed charges by 100 foundation factors since September, pausing in January, however markets now anticipate cuts to renew in June. That’s maintaining the greenback beneath strain, a stark shift from when Trump’s protectionist insurance policies strengthened the forex.
“The inflation data is helping to give the market confidence that the easing cycle will continue, given concerns around inflation and growth,” mentioned Normal Chartered analyst Suki Cooper.
Investor demand for gold is surging, with physically-backed gold exchange-traded funds (ETFs) recording their largest weekly influx since March 2022, in response to the World Gold Council’s February information.
The SPDR Gold Belief (GLD), the world’s largest gold-backed ETF, noticed holdings rise to 907.82 metric tons on February 25, the best 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,” mentioned Dina Ting, Head of World Index Portfolio Administration at Franklin Templeton.
She famous that whereas funding methods differ, a 5% to 10% gold allocation can supply efficient diversification.
Gold’s rise is getting one other tailwind from central financial institution demand. Analysts say sturdy shopping for in 2025 may push costs to new highs as nations proceed stockpiling the steel amid financial 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 mentioned.
China’s gold reserves marked 4 straight months of shopping for in February. After an 18-month spree, the central financial institution paused for six months in 2024 earlier than resuming purchases in November.
Within the absence of any enchancment within the U.S. funds deficit, gold may problem a excessive of about $3,500, Macquarie mentioned in a be aware. Goldman Sachs raised its year-end 2025 gold goal to $3,100.Central banks snapped up over 1,000 tons of gold for the third 12 months in a row in 2024, and within the remaining quarter of 2024 – as Trump’s election win roiled markets – shopping for soared 54% year-on-year, in response to a report from the World Gold Council final month.
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