By Anjana Anil and Anushree Mukherjee
(Reuters) – Gold prices soared to record levels above $3,100 per ounce in a rally marking one of the most significant upswings in the precious metal’s history, with psychological levels swept aside by a cocktail of factors – including worry about fallout from impending U.S. tariffs.
Spot gold hit a record of $3,128.06 per ounce on Monday.
Uncertainty surrounding U.S. President Donald Trump’s tariffs added extra heat to the momentum pushing gold higher, including strong demand from central banks, expectations of interest rate easing by the Federal Reserve, geopolitical instability in the Middle East and Europe, and increased flows into gold-backed exchange traded funds.
Bullion is set to log its biggest quarterly rise since September 1986, and has already posted 19 all-time highs in 2025, among which seven are above the unprecedented $3,000 level mark.
Prices are up 18% this year, after surging 27% in 2024.
“Gold’s rally has been fuelled by escalating geopolitical tensions, inflation concerns, and strong investor demand. Given the current macroeconomic environment – particularly trade war uncertainties and central bank policies – this trend appears sustainable in the near term,” said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.
U.S. President Donald Trump is expected to announce reciprocal tariffs on April 2, while automobile tariffs will take effect on April 3.
“Geopolitical uncertainty is high, with Middle East hostilities ongoing and a complete Russia-Ukraine ceasefire remaining elusive. Trump’s weekend comments on Russia, Iran, and Greenland raise the geopolitical temperature, further enhancing gold’s appeal,” said Nikos Tzabouras, senior market analyst at Tradu.com.
Last year, gold recorded its best yearly performance since 2010, prompted by market participants fleeing to the safe-haven asset due to increased geopolitical turmoil rising from the wars in the Middle East and Europe, and to safeguard against the turbulent economic landscape against the backdrop of Trump taking office and resultant tariff proposals.
Another major factor that contributed to the surge was the Fed’s rate easing policy after the U.S. central bank cut rates by 50 basis points in September. The Fed officials expect two rate cuts by the end of this year.
“Whilst buying gold may reduce central banks’ overall exposure to the dollar, we don’t think that the surge in central bank gold demand reflects a severe loss of confidence in the greenback,” analysts at Capital Economics said.
“Instead, the perception of gold itself as a safe haven is probably the key driver of central bank demand. In any case, we think official sector purchases will support gold prices to an above-consensus $3,300 per ounce by end-2025.”
Investor appetite for gold is surging, as reflected in the increased inflows to ETFs, which saw their biggest weekly inflow since March 2022, signalling a renewed rush toward the precious metal.
“While North American ETFs have seen inflows, the broader trend suggests increasing demand from European investors seeking safe-haven assets due to political uncertainties,” Zumpfe said.
(Reporting by Anjana Anil, Anushree Mukherjee and Brijesh Patel in Bengaluru; editing by David Evans)
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