Gold surged to an all-time high on Thursday, fueled by a combination of factors, including expectations of interest rate cuts by the US Federal Reserve, ongoing geopolitical tensions, and economic uncertainties. Spot gold briefly reached a record $3,055.96 an ounce before settling at $3,048.37 as of 0350 GMT. US gold futures rose 0.5% to $3,056.50, continuing the upward momentum for the precious metal.
Gold’s recent surge has been driven by multiple uncertainties, according to Dick Poon, general manager at Heraeus Metals Hong Kong Ltd. “A lot of uncertain market situations, geopolitical tensions, a weaker US dollar, and expectations that interest rates will be cut later” have all played a role in boosting bullion’s appeal. The Fed‘s decision to hold the benchmark interest rate steady in the 4.25-4.50% range, coupled with expectations that two rate cuts could come by the end of 2025, has also contributed to gold’s rise, as non-yielding gold becomes more attractive in a low interest rate environment.
US President Donald Trump’s initial policies, especially his trade tactics such as extensive import tariffs, are also seen as key drivers of the current gold rally. According to Fed Chair Jerome Powell, these tariffs have contributed to slower economic growth and, at least temporarily, higher inflation. Trump’s tariff policies, which have sparked trade tensions with multiple countries, are generally thought to be inflationary and detrimental to long-term economic growth.
This uncertainty surrounding tariffs, the potential for future interest rate cuts, and escalating geopolitical tensions—particularly in the Middle East—have combined to create an environment where gold thrives. In 2025 alone, gold has hit 16 record highs, with four of those surpassing the $3,000 per ounce mark. Gold’s traditional role as a safe haven asset and its function as an inflation hedge have further solidified its appeal to investors amid these turbulent times.
OCBC FX strategist Christopher Wong pointed out that gold’s safe haven and inflation hedge characteristics have strengthened, especially in light of the tariff uncertainty and rising geopolitical risks. “We remain constructive on the outlook of gold,” he said.
Despite the strong performance in gold throughout the first quarter of 2025, some analysts, like Nicholas Frappell, global head of institutional markets at ABC Refinery, have cautioned that a correction might occur. However, Frappell noted that past corrections have been short-lived and that gold prices have been well-supported, with resistance expected around the $3,090-$3,100 range.
In summary, gold’s ascent to record highs can be attributed to a confluence of factors, with Trump’s trade policies playing a significant role in stoking inflation fears and economic uncertainty. As long as these factors persist, gold’s appeal as a safe haven is likely to remain strong.
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