The price of gold soared to an all-time high on Friday, reaching $3,223.72 per ounce, as investors rushed to the safe-haven asset amid rising geopolitical tensions and a sharp escalation in the trade war between the US and China.
China raised tariffs on American imports to 125% in retaliation for President Trump’s decision to increase duties on Chinese goods to 145%, fuelling concerns about the stability of global trade and rattling markets.
Adding to the rally, the US dollar weakened to a two-year low against a basket of major currencies, raising further doubts over America’s role as a stabilising force in the global financial system. Because gold is priced in dollars, a weaker greenback typically boosts demand by making the metal cheaper for overseas buyers.
The surge in gold prices reflects a confluence of global pressures. Beyond trade tensions, markets have been driven by:
• Ongoing central bank purchases of gold
• Expectations of rate cuts by the US Federal Reserve
• Geopolitical instability in regions such as the Middle East and Europe
Gold has traditionally been regarded as a safe-haven asset — a store of value during periods of economic or political uncertainty. Unlike fiat currencies, which can be printed, gold is finite, giving it intrinsic value and appeal during times of volatility.
“Gold is proving its worth once again as the ultimate hedge during times of market turmoil and currency devaluation,” said one commodities analyst.
The rally in gold also reflects changing sentiment over US monetary policy. Inflation data released on Thursday showed an unexpected drop in consumer prices in March, fuelling speculation that the Federal Reserve could begin cutting interest rates as early as June.
Markets are now pricing in the possibility of a full percentage point in rate cuts by the end of 2025.
Lower interest rates make gold more attractive to investors as it reduces the opportunity cost of holding non-yielding assets like precious metals.
Despite its appeal, gold is not without drawbacks. Unlike equities or bonds, gold doesn’t generate income — it pays no dividends or interest. And while it has a long-term track record of preserving wealth, the price can be volatile in the short term, especially as investor sentiment and macroeconomic conditions shift.
Nevertheless, with markets on edge, the dollar under pressure, and political tensions on the rise, gold continues to shine as a preferred hedge in uncertain times.
