Spot gold surged by 1.1% on Monday morning to reach $3,116.82 an ounce as of 06:38 GMT, after briefly climbing to a record high of $3,128.06 earlier in the session.
This unprecedented rally positions gold for its biggest quarterly gain in over 38 years, reflecting heightened investor anxiety over widening global trade tensions fueled by U.S. President Donald Trump’s tariff plans.
Gold has rallied more than 18% in the first quarter of 2025, marking the strongest quarterly performance since September 1986.
A combination of factors has contributed to the meteoric rise, including interest rate cut speculation, aggressive central bank purchases, and robust demand for exchange-traded funds (ETFs) linked to the precious metal.
The easing of the dollar index by 0.2% further amplified gold’s attractiveness, making dollar-priced bullion cheaper for investors holding other currencies.
Uncertainty Drives Bullion’s Appeal as Tariff Deadlines Loom
Analysts note that global markets are bracing for Trump’s tariff scheduled for April 2, labeled “Liberation Day.”
KCM Trade’s chief market analyst Tim Waterer explained, “Markets’ anxiety levels have ramped up ahead of the reciprocal U.S. tariff announcements. This uncertainty is keeping gold in high demand as a defensive play.”
Waterer added that gold’s price trajectory could shift if the tariff measures announced this week prove less severe than anticipated, triggering profit-taking from recent highs. Trump’s plans include reciprocal tariffs on up to 25 countries and automobile levies set to take effect on April 3, further fueling safe-haven demand for gold.
Beyond trade policy, geopolitical tensions have also played a pivotal role in supporting gold’s rally.
Over the weekend, Trump expressed frustration with Russian President Vladimir Putin, threatening secondary tariffs of 25%-50% on buyers of Russian oil if Moscow continues to obstruct peace negotiations in Ukraine. This escalation is expected to further impact commodity markets in the coming weeks.
What you should know
While gold achieves historic highs, equity markets have suffered under the weight of trade tensions. The S&P 500 is on track for a 5% quarterly decline—its worst performance since July 2022. Amid this volatile landscape, major financial institutions have issued optimistic forecasts for gold’s future.
- Bank of America recently raised its gold price target to $3,500 by 2027, though analysts suggest that this projection may be conservative given the current pace of gains.
- Goldman Sachs anticipates gold ending the year at $3,300 per ounce, while Société Générale aligns its forecast for 2025 with a similar target. SocGen analysts further speculate that geopolitical instability could pave the way for gold prices to reach $4,000.
- As safe-haven demand continues to dominate, gold remains a standout performer in financial markets, offering investors a resilient hedge against mounting uncertainty.
With the possibility of further escalations in trade and geopolitical tensions, gold’s trajectory is poised for sustained growth in the coming months.
