Gold prices have surged to unprecedented levels, driven by geopolitical uncertainty and heightened inflation expectations, with market reactions linked to U.S. trade policies.
On Monday, gold prices reached new highs as concerns over the potential impacts of U.S. tariffs on global trade intensified. For the first time, the price of one ounce (31.1 grams) of gold exceeded $2,900 on the London market. By late morning, gold was trading at $2,906.30 per ounce—significantly higher than the price of around $2,000 per ounce just one year ago. Since mid-December, gold prices have climbed by approximately 12%.
The record-setting prices extend beyond U.S. dollars. Gold also reached an all-time high in euros, trading at €2,814.35 per ounce, reflecting the global demand for the precious metal.
Gold’s Role as a Safe Haven
Precious metals trader Alexander Zumpfe, from the German company Heraeus, explained that the latest tightening of U.S. trade policy has created significant market uncertainty, driving investors toward gold as a secure asset. Gold is often seen as a safe-haven investment in times of economic instability.
The recent surge in gold prices comes on the heels of U.S. President Donald Trump’s announcement of a 25% tariff on all steel and aluminum imports. Full details of the new tariffs are expected to be revealed early this week, adding to market volatility.
Rising Demand Amid Inflation Concerns
Ricardo Evangelista, an analyst at ActivTrades, a Luxembourg-based firm, highlighted two key factors behind the growing demand for gold: concerns about the U.S. administration’s protectionist policies and increasing inflation in the U.S. Gold is often used by investors as a hedge against inflation.
Central Banks Strengthen Gold Reserves
Zumpfe also noted the ongoing demand for gold from central banks. Many institutions have been increasing their gold reserves as a strategy to reduce reliance on the U.S. dollar as the global reserve currency. China’s central bank, for example, added to its gold holdings in January.
With geopolitical tensions and inflationary pressures expected to persist, gold prices are likely to continue their upward trajectory. Zumpfe suggested that a potential rise toward the psychologically significant $3,000 per ounce mark is possible if current trends hold.
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