PUBLISHED: 11 Feb 2025 at 11:44
Gold markets experienced a rollercoaster trading session, reaching a record high before retracing gains, following U.S. President’s recent tariff announcement on steel and aluminum imports. This move has sent ripples of uncertainty across global financial markets.
The price of bullion peaked above $2,942 per ounce but later saw a significant pullback. The President stated that these tariffs, set to take effect on March 4, aim to stimulate domestic production and create jobs, while also indicating potential for further increases in tariffs.
This year, gold has rallied approximately 11%, achieving successive record highs as the President’s trade strategies and geopolitical maneuvers reinforce gold’s status as a safe-haven asset. Investors are closely analyzing potential impacts on the U.S. economy and monetary policy, particularly in relation to inflation concerns and economic growth.
Market attention is fixated on upcoming testimony from the Federal Reserve Chair before Congress, expected to provide insights into future monetary policy. Short-term inflation expectations have surged, signaling shifts in economic outlooks, which may influence gold prices due to its non-interest-bearing nature.
Gold’s surge has been reflected in increased investments in gold-focused exchange-traded funds, with global holdings rising for six out of the past seven weeks, reaching the highest levels since November.
Financial institutions are projecting gold prices could test the $3,000 mark soon, with some estimates suggesting this could happen within three months. Factors driving this demand include ongoing geopolitical tensions and trade disputes.
As of 11:07 AM in Singapore, spot gold was up 0.2% at $2,915.01 per ounce, having reached highs of $2,942.68 earlier. Silver and platinum prices dipped, while palladium remained stable.
Some indicators suggest that the gold rally may be nearing a peak, with metrics indicating a potential pause in gains as the relative-strength index approaches levels often seen as overbought.
The surge in gold prices has positively affected mining stocks, with notable gains in the shares of Zijin Mining Group Co and Northern Star Resources Ltd, marking substantial increases this year.
Additionally, the People’s Bank of China has expanded its gold reserves for the third consecutive month, signaling a commitment to diversifying its holdings even amid high market prices. China also initiated a pilot program allowing major insurers to invest in gold, potentially unlocking billions in new investment.
