The News
The price of gold soared above $3,000 an ounce for the first time in history on Friday, as demand for the precious metal surges amid escalating uncertainty over the impact of a global trade war. Goldman Sachs, UBS, and other investment banks have raised their targets for gold, forecasting as much as 8% price growth by the end of this year.
SIGNALS
US tariff uncertainty prompts investors to look for safe havens
The price milestone “drives home gold’s centuries-old role as a store of value in turbulent times,” Bloomberg wrote. In case of a trade war, gold would be the best performing asset, a recent survey of global fund managers by the Bank of America found. The rising price of gold signals investors’ concerns about the US’ economic outlook amid President Donald Trump’s aggressive tariffs approach, analysts said. “It’s a sign of the amount of uncertainty that’s being created that amidst everything else, the asset that’s done well is gold,” former Treasury Secretary Larry Summers told CNN. “That’s what people do when they don’t have confidence in the people who are managing the country.”
Central banks are wary of relying heavily on the US dollar
Gold demand rose sharply after Russia’s invasion of Ukraine, when the US “basically used its currency as a weapon” to freeze Russia out of the international financial system, prompting other countries to rethink their reliance on dollar-based assets, the Financial Times markets columnist noted: China and India, which have economies ties with Moscow, were among the top five gold buyers in 2024. Russia has also used its gold reserves to facilitate wartime trading relationships with its key allies, a RAND analyst noted. “The incentives for governments to store value in prices beyond the reach of Uncle Sam is growing,” The Economist wrote.