Gold has surged past the $3,000 per ounce milestone for the first time, driven by economic uncertainty, inflation fears, and global trade disputes. On Friday, gold hit a record $3,004.86 per ounce, marking a 14% increase since early 2025.
Why Is Gold Price Rising?
Gold is considered a safe-haven asset, meaning investors flock to it during times of economic instability. The latest surge in gold prices is largely due to the escalating trade war between the U.S. and its major trading partners, which has unsettled financial markets and increased inflation concerns.
Key Factors Driving Gold Prices Higher
Trade War & Tariffs:
- The U.S. government has increased tariffs on Chinese imports to 20%.
- President Donald Trump threatened a 200% tariff on imported alcohol from the European Union (EU) in response to the EU’s planned 50% tax on U.S. whiskey.
- These rising trade restrictions increase costs for businesses, fueling inflation fears and making gold more attractive to investors.
Inflation & Rising Cost of Living:
- When tariffs increase, businesses pass extra costs to consumers, leading to higher prices on everyday goods.
- This raises concerns about inflation, driving more people to buy gold as a hedge against economic instability.
Central Banks Stockpiling Gold:
- Global central banks have been buying large amounts of gold to diversify their reserves and reduce reliance on the U.S. dollar.
- In 2024, central banks purchased over 1,000 metric tons of gold, according to the World Gold Council.
Gold as a Safe Investment: A Historical Perspective
Gold has historically outperformed during financial crises:
- 2007-2008 Global Financial Crisis: Investors rushed to gold as a safe-haven asset.
- COVID-19 Pandemic: Economic instability pushed gold prices to new highs.
- 2025 Trade War & Geopolitical Tensions: The current surge is driven by uncertainty in U.S.-China-EU relations and conflicts in the Middle East and Eastern Europe.
What’s Next for Gold Prices?
Market analysts predict that as inflation, trade wars, and geopolitical tensions continue, gold prices could rise even further. Many investors and central banks see gold as a long-term hedge against economic turmoil.
Final Thoughts
With ongoing U.S.-China trade tensions, rising inflation, and global economic uncertainty, gold is proving once again to be a reliable investment. If market instability persists, the price of gold could see even greater gains in 2025 and beyond.
Source: bbc.co.uk
