Gold Hits Record High in Volatile Session as Trump Boosts Demand for Precious Assets
Gold traded in a volatile session for several hours, rising to a record high, then paring gains after President Donald Trump imposed tariffs on U.S. steel and aluminum imports, adding to uncertainty in global markets.
Bullion hit a fresh peak above $2,942 an ounce, before retracing most of its gains. Trump said on Monday that the latest round of levies, which took effect in March, would boost domestic production and bring more jobs to the U.S. He also warned that tariffs “may go higher.”
The precious metal has surged about 11% this year, setting back-to-back records, as Trump’s disruptive moves on trade and geopolitics have strengthened his role as a store of value in uncertain times. Traders are also trying to understand the potential implications for the U.S. economy and monetary policy if the White House’s policies reignite inflation and dampen growth. Investors will be focused on Federal Reserve Chairman Jerome Powell’s testimony before Congress on Tuesday and Wednesday for clues on monetary policy. Short-term U.S. inflation expectations have risen above longer-term expectations to the widest level since 2023. That could strengthen the case for slower easing, a scenario that could be bad for bullion because it doesn’t pay interest.
Gold’s rally has been accompanied by inflows into bullion-backed exchange-traded funds. Global holdings have risen for six of the past seven weeks, hitting their highest since November, according to a Bloomberg tally.
Banks have predicted that a test of $3,000 an ounce is imminent. Among them, Citigroup Inc. said last week it expects gold to hit that level within three months, with geopolitical tensions and trade wars boosting demand. At J.P. Morgan Private Bank, the year-end target is $3,150 an ounce, according to global market strategist Yuxuan Tang. “Until we see clarity on U.S. policy, both on trade and the economy, that’s going to create an environment for increased levels of volatility in gold,” said Joseph Cavatoni, senior market strategist for North America at the producer-funded World Gold Council.
“So while we may see gold at $3,000, we expect there to be a sustained move that takes us back below that level.” Read More: Bond Market Inflation Gauge Under Pressure Amid Trump Tariff Chaos Spot gold rose 0.2% to $2,915.28 an ounce at 12:56 p.m. in Singapore, after rising to a high of $2,942.68. Among other precious metals, silver lost ground, platinum fell, while palladium edged up. The Bloomberg Dollar Spot Index was steady after rising on Monday.
Some market metrics suggest bullion’s surge may be overdone, suggesting a pause may be needed. Gold’s 14-day relative strength index — a gauge of the speed and intensity of moves — is near 80, well above the 70 level considered overbought by some analysts.
The rally in precious metals has boosted producer shares. In Hong Kong, Zijin Mining Group Co. jumped more than 4% to its highest since November, while in Australia, Northern Star Resources Ltd. hit a record, gaining about a fifth this year.
Elsewhere, China’s central bank expanded its gold reserves for a third month in January, signaling a continued commitment to diversifying holdings even as prices hit historic highs. Asia’s largest economy also announced a pilot program to allow 10 major insurers to invest as much as 1% of their assets in bullion for the first time. That could raise as much as 200 billion yuan ($27.4 billion) in potential funds, according to Minsheng Securities Co.—with help from Yihui Xie.
Source: Bloomberg
