Gold prices surged to a new record high on Tuesday, as mounting concerns over U.S. President Donald Trump’s repeated attacks on Federal Reserve Chairman Jerome Powell led to increased demand for safe-haven assets. The price of gold peaked at $3,500.05 per troy ounce earlier in the day, according to Refinitiv data, before settling at $3,479.50.
This marks a significant increase for gold, which has risen by more than 31% so far this year, making it one of the biggest winners amid ongoing global trade tensions. Analysts attribute the surge to growing unease about the U.S. economy and escalating political and geopolitical risks.
Safe-Haven Demand Amid Economic Uncertainty
Rania Gule, senior market analyst at XS.com, noted in a research report that the rally in gold is driven by rising demand for assets considered safe bets during periods of economic instability. “This rally reflects ongoing recession fears in the U.S. economy and heightened political tensions,” Gule wrote. “Investor confidence in the U.S. dollar has been declining, and concerns about economic and geopolitical risks are fueling the surge.”
In contrast to gold, U.S. Treasury bonds have been under heavy selling pressure, with the yield on 10-year Treasuries increasing. Bond yields and prices move inversely, indicating that the bond market is reflecting investor unease as well.
Trump’s Trade War and Fed Attacks Amplify Market Volatility
The rise in gold prices comes in the wake of a sell-off in U.S. markets, where all three major indexes—the Dow, the S&P 500, and the Nasdaq Composite—saw significant declines on Monday. The market turmoil has been exacerbated by Trump’s ongoing trade war and his repeated threats to remove Powell from his position at the Federal Reserve. Trump has publicly criticized Powell for not lowering interest rates and has vowed to fire him, calling him a “loser” in a series of social media posts.
This has sparked concerns among investors about the potential erosion of the Fed’s independence, further undermining confidence in U.S. markets. Last week, Powell warned that Trump’s tariffs could have serious economic consequences, stoking inflation and potentially slowing down growth. This added fuel to the ongoing market volatility and heightened fears of a looming recession.
Global Market Reaction
In global markets, Asian shares ended mostly flat on Tuesday. Japan’s Nikkei 225 index dropped 0.2%, while South Korea’s Kospi saw a slight decrease of less than 0.1%. Hong Kong’s Hang Seng index, however, closed 0.8% higher, bucking the overall trend in the region.
The turbulence in financial markets, combined with political instability in the U.S., continues to drive investors toward gold, with the precious metal maintaining its status as a reliable safe-haven amid uncertainty.
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