Gold surged nearly 3% to above $3,060 per ounce on Wednesday, hitting a new all-time high as safe-haven demand intensified amid growing fears of a full-blown trade war and a potential global recession.
Gold jumps as trade war fears escalate
Investors flocked to the precious metal after China announced it would raise its reciprocal tariffs on U.S. goods to 84%, up sharply from the previously signaled 34%. The move was a direct response to the latest round of U.S. tariffs, which included a sweeping 104% levy on Chinese imports. The sharp escalation in trade tensions between the world’s two largest economies has triggered widespread market anxiety, with growing expectations that prolonged economic conflict could severely disrupt global supply chains and dampen already fragile growth prospects.
Further fueling investor caution, President Trump stated on Tuesday that his administration is preparing to unveil a “major” tariff targeting pharmaceutical imports—a move that could further inflame global trade tensions and stoke inflationary pressures. The aggressive stance has heightened fears of retaliatory measures from other key trade partners and signaled a broader protectionist pivot that could reshape international commerce.
Gold safe-haven appeal increases
Gold, traditionally seen as a hedge against both geopolitical risk and inflation, has benefited from the broader flight to safety. Demand has also been supported by a weakening U.S. dollar and falling real yields, as markets increasingly bet on central bank easing cycles across major economies. Notably, the World Gold Council reported that gold-backed ETFs experienced robust inflows of 226.5 metric tons—valued at $21.1 billion—in the first quarter of 2025, marking the strongest quarterly inflow in three years. Institutional interest has surged as portfolio managers seek refuge from volatile equities and bond markets, and as central bank gold purchases continue to trend higher, particularly in emerging markets.
With uncertainty likely to remain elevated in the near term, many analysts believe gold could maintain its upward trajectory, especially if trade tensions escalate further or if monetary policy turns more accommodative globally. Some traders are already eyeing $3,100 as the next psychological resistance level.
