Gold prices surged more than 1% on Thursday, buoyed by a flight to safety after U.S. President Donald Trump escalated tariffs on China, raising fresh concerns over inflation and global growth. Despite a temporary tariff pause for other countries, the move intensified the ongoing trade war between the world’s two largest economies.
- Spot gold rose 1.2% to $3,120.01/oz (as of 0655 GMT), marking its strongest day since October 2023 in the previous session.
- U.S. gold futures jumped 1.9% to $3,137.20/oz.
🔥 Tariff Tensions Reignite Demand for Bullion
Trump announced a tariff increase on Chinese imports to 125% from 104%, prompting investors to seek refuge in gold, a traditional hedge during economic and geopolitical uncertainty. The latest tariffs overshadowed the administration’s decision to temporarily ease duties for other nations.
“If we enter a slow growth period, which is our base case, we think rates will eventually head lower and push gold higher,” said Edward Meir, analyst at Marex, adding that $3,200/oz could be reached “by month-end, if not earlier.”
📈 Factors Fueling the Gold Rally in 2025
Gold has already gained more than 18% this year, fueled by:
- Trade tensions and inflation fears due to tariffs.
- Anticipation of interest rate cuts from the Federal Reserve.
- Ongoing geopolitical instability in Ukraine and the Middle East.
- Robust central bank gold purchases.
- A surge in gold-backed ETF investments.
📊 Fed’s Balancing Act
Minutes from the Fed’s latest meeting reveal that most policymakers are concerned about the economy facing “higher inflation alongside slower growth.” This puts pressure on the Fed’s future rate decisions, with possible trade-offs looming.
Gold, which yields no interest, typically underperforms when rates are high. However, its role as an inflation hedge keeps it attractive amid uncertainties.
🔍 What’s Next?
Investors are now eyeing key U.S. data:
- Consumer Price Index (CPI) – due later today.
- Producer Price Index (PPI) – expected on Friday.
These indicators could provide further clues on inflation trends and Fed policy direction.
🪙 Other Precious Metals
- Silver: +0.7% at $31.24/oz
- Platinum: +0.2% at $938.95/oz
- Palladium: -0.6% at $926.41/oz
