Gold prices have seen a significant surge, reaching new highs as geopolitical tensions, particularly the escalating U.S.-China trade war, continue to drive demand for the precious metal as a safe haven. Goldman Sachs has revised its 2025 gold price target to $3,700 per ounce, its third increase this year, citing rising fears of a U.S. recession and the ongoing trade conflict between the two largest economies.
Earlier in March, the investment bank had set its target at $3,300 per ounce, but the worsening trade war has prompted a more bullish outlook. Goldman Sachs has also warned that, in an extreme risk scenario, gold prices could soar to as high as $4,500 per ounce by the end of 2025.
Geopolitical Tensions Boost Gold’s Appeal
Gold prices crossed the $3,200-per-ounce threshold for the first time last week, with spot gold reaching a record high of $3,245.69 per ounce. This surge is attributed to a combination of economic uncertainty and rising demand for gold in both physical purchases and exchange-traded funds (ETFs). The escalating trade war between the U.S. and China, with tariffs on Chinese imports raised to a cumulative 145%, has prompted retaliatory tariffs from Beijing of up to 125% on American goods, further intensifying market uncertainty.
In addition to the tariffs, U.S. President Donald Trump’s announcement of plans to impose reciprocal tariffs on key U.S. trading partners, while delayed for 90 days, has fueled fears of a prolonged trade dispute. A 10% universal tariff has already been implemented, with additional targeted tariffs on electronics and pharmaceuticals expected soon.
Central Banks Increase Gold Purchases
Several major global central banks, especially in Asia, have significantly increased their gold purchases in recent months. This trend reflects growing concerns over the potential for a U.S. recession, amplified by ongoing economic uncertainty under the Trump administration.
Gold Prices Dip Following Tariff Exemptions
Despite the bullish outlook, gold prices experienced a slight pullback on Monday, as U.S. President Trump eased some trade tensions by granting tariff exemptions on smartphones, computers, and other electronics primarily imported from China. Spot gold was down 0.4%, trading at $3,223.67 per ounce, while U.S. gold futures eased 0.1% to $3,240.90 per ounce.
Goldman Sachs remains bullish on gold’s prospects, citing continued strong demand for the metal amid growing concerns over global economic instability.
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