Gold surged above $2,910 per ounce on Tuesday, trading near record levels after briefly reaching a new high of $2,940, driven by strong safe-haven demand amid rising trade tensions and economic uncertainty.
Gold nears record level, $3,000 on the horizon
The surge came after President Donald Trump imposed sweeping tariffs on all steel and aluminum imports into the US and hinted at new reciprocal tariffs this week. Geopolitical risks also escalated, as Hamas suspended the release of Israeli hostages, citing alleged Israeli ceasefire violations in Gaza, which raised concerns about a potential resurgence of conflict in the region.
Monetary policy effects
Meanwhile, expectations of looser monetary policy are further supporting non-yielding gold, with markets anticipating two Fed rate cuts in 2024. Both the Bank of England and the Reserve Bank of India have also made recent dovish cuts, following similar actions by the ECB, Riksbank, and Bank of Canada. Additionally, central bank gold purchases continue to provide upward pressure on bullion prices, with the People’s Bank of China increasing its reserves for the third consecutive month in January. This combination of geopolitical instability, economic uncertainty, and continued central bank buying is fueling gold’s upward momentum.
