Saxo Bank has raised its forecast for gold prices, predicting they could surge above $3,000 an ounce, driven by escalating global trade tensions. The recent pullback in gold prices, which saw a brief correction last week, has proven short-lived as concerns about a global trade war triggered renewed safe-haven demand for the precious metal.
The catalyst for the surge in gold prices was a sharp sell-off in U.S. equities, particularly the S&P 500, which began on Monday afternoon. President Donald Trump’s announcement that his 25% tariffs on Canadian and Mexican imports would take effect at midnight Tuesday was followed by the extension of tariffs on Chinese goods, plunging the U.S. into a full-scale trade conflict with multiple nations.
The S&P 500 dropped 104 points on Monday and continued its decline on Tuesday, breaking below critical support levels. By 10:05 am ET, the index had fallen to 5,763 points, a nearly 1.5% drop. Meanwhile, gold prices surged, reclaiming a solid position above $2,900 per ounce. April gold futures were trading at $2,919.50 per ounce, reflecting a 0.63% increase on the day.
The renewed tariff concerns have erased the equity market’s gains since the 2020 election, highlighting the growing risks of prolonged trade conflicts. Saxo Bank’s Ole Hansen, Head of Commodity Strategy, commented on the situation, stating that gold’s recent shallow correction has opened up potential for further gains. Hansen reaffirmed that the $3,000 price target for gold is once again in play.
“The outlook for gold remains strongly supportive, especially given the limited depth of the latest correction, which signals persistent strong demand despite selling pressure from technically focused traders,” Hansen said in a recent note on precious metals. “In addition to diversification and safe-haven demand, gold is likely to continue benefiting from central bank buying as fiscal debt concerns persist.”
Hansen also pointed out that geopolitical uncertainty, coupled with growing weakness in the U.S. dollar, is helping to support gold’s upward momentum. The U.S. dollar index is testing critical support levels around 106 points, further adding to the appeal of gold as an alternative investment.
Another factor driving gold’s potential is the slowing pace of economic activity, which has led to heightened expectations that the Federal Reserve may be forced to cut interest rates later this year, despite persistent inflation. This dovish shift in monetary policy is expected to benefit gold, which thrives in low-interest-rate environments.
Hansen remains cautiously optimistic, acknowledging that markets do not move in a straight line. However, he emphasized Saxo Bank’s recently raised target for gold, set at $3,300 per ounce.
In terms of gold’s investment potential, Hansen highlighted the rising demand for gold-backed exchange-traded products (ETFs), despite ongoing volatility in speculative trading. He noted that demand for bullion-backed ETFs had risen significantly in recent weeks, although total holdings, at 85.8 million ounces, still remain below the 2022 peak of 107 million ounces.
As global trade tensions intensify and concerns about fiscal policies and economic slowdowns grow, gold is expected to continue attracting both institutional and retail investors seeking a safe-haven asset amid market instability. With a potential rise in investment demand and geopolitical uncertainties looming, Saxo Bank’s prediction of gold surpassing $3,000 seems increasingly plausible.
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