The price of gold continued to rally hitting another record high on Friday, as the impact of trade tariffs, fears of a recession and a weaker dollar rattled global financial markets. Many reckon further upside might be on the horizon.
At 10:45 a.m. EDT on Friday, traders stateside saw the COMEX Gold June contract up 2.18% or $69.20 to $3,246.70 per troy ounce — a record high. Meanwhile, gold spot trading in Dubai saw highs of its own with the yellow metal changing hands at $3,228, up 1.66% or $52.64.
Courtesy of interest rate cuts by the U.S. Federal Reserve in the latter half of 2024, gold ended last year up 26% on an annualized basis. The rally extended further over the first quarter of 2025, before the latest spike.
That’s after U.S. President Donald Trump slapped a 10% “baseline” tariff on imports to the states on April 2. These took effect on Wednesday. Those targeted include a number of key manufacturing centers in Asia, wherein the biggest — China — faces tariffs of 145% on most goods.
Beijing responded with 125% tariffs of its own on U.S. exports to China, with both countries embroiled in an ever growing trade spat that threatens to potentially spill out of control.
This has seen investors seeking a safe haven in a volatile world park their money in gold bullion in ever greater numbers, despite it being a non-yielding asset.
Seeking A Safe Haven In A Volatile World
With stocks, bonds, oil futures and the U.S. dollar all taking a hit over the past week, a full-on demand frenzy for the yellow metal and its price spike appear in stark contrast.
Several central banks have also followed investors — both retail and institutional — in buying gold bullion, reminiscent of their actions during the global financial crisis 2008-09 and the transition to a low interest rate climate.
Trading has reached a point where the $3,000 level has moved on from being a price target, as recently as February, to a bit of a psychological support level for investors dabbling in the gold market.
While many reckon any price level above $3,000 points to an overextended market, any dips below it, often seen earlier in the cycle, have sparked fresh buying frenzies. This keeps the near-term bullish case for gold as strong as ever, according to Goldman Sachs.
Does A $4,000-Plus Gold Price Beckon?
A week before President Trump’s move to slap major U.S. trading partners with tariffs, the investment bank revised its year-end price forecast to $3,300, up from $3,100.
But now, in a worst case macroeconomic scenario riddled with potential trade wars, geopolitical tensions and recessionary headwinds, even Goldman Sachs’ “extreme case” forecast of $4,200 is palatable for some.
While the extreme case may not materialize, many Wall Street forecasters believe a $3,000 price floor will likely hold. They include Bank of America, which expects gold to average $3,063 in 2025.
UBS, Citi and JPMorgan also expect gold prices to remain near or north of $3,000. Be prepared to expect more twists and turns along the way, even if the said price floor likely holds.
Disclaimer: The above commentary is meant to stimulate discussion based on the author’s opinion and analysis offered in a personal capacity. It is not solicitation, recommendation or investment advice to trade gold stocks, futures, options or products. Gold markets can be highly volatile and opinions in the sector may change instantaneously and without notice.
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