TLDR
- Gold prices hit a record high of $3,317.90, crossing $3,300 for the first time
- Trump ordered a probe into potential tariffs on US critical minerals imports, escalating trade tensions with China
- ANZ raised its year-end gold price forecast to $3,600 per ounce
- Chinese airlines directed to cease Boeing jet deliveries amid tariff disputes
- Investors seek safe-haven assets due to recession fears, geopolitical tensions, and fiscal debt concerns
Gold prices surged past $3,300 per ounce for the first time on Wednesday, as investors flocked to safe-haven assets. The precious metal reached a record high of $3,317.90 during early trading.
Spot gold rose 2.7% to $3,314.29 an ounce, while US gold futures gained 2.8% to $3,330.30. This marks the fifth day of price increases in the last six trading sessions.
The rally comes as US President Donald Trump ordered a probe into potential new tariffs on all US critical minerals imports. This move targets China, the industry leader in critical minerals.
This investigation follows similar reviews into pharmaceutical and semiconductor imports that Trump has initiated since taking office in January. These actions have further heightened global trade tensions.
Trade War Escalation
The trade conflict shows no signs of easing. Trump’s recent moves have triggered fresh investor movement toward safe havens and away from stocks.
China responded to escalating US tariffs by directing its airlines to stop all further deliveries of Boeing jets. This retaliatory measure adds another dimension to the growing trade dispute.
The US Commerce Department announced on Tuesday new export licensing requirements for advanced AI chips from Nvidia and AMD to China. This announcement led to a sell-off in Asian stocks.
China has also increased its tariffs on US imports to 125% last Friday. Market observers worry that this tit-for-tat trade war between the world’s two largest economies could weaken global growth.
Trump previously backed off hefty reciprocal tariffs on most US trading partners for 90 days. He also removed smartphones, computers, and some electronics from steep tariffs on China.
Economic Outlook and Gold Forecast
Major banks have upgraded their gold price forecasts. ANZ on Wednesday raised its year-end gold price prediction to $3,600 per ounce and its six-month forecast to $3,500.
Ole Hansen, head of commodity strategy at Saxo Bank, explained the upgrade:
“We are upgrading gold forecast to $3,500 supported by a world in disarray where investors seek shelter amid recession fears, geopolitical tensions, fiscal debt concerns and central banks diversifying their holdings away from USD.”
The dollar eased 0.5% against its rivals on Wednesday, making gold cheaper for overseas buyers. This weakness in the US currency has contributed to gold’s appeal.
Expectations for more aggressive policy easing by the Federal Reserve in 2025 also benefit the non-yielding precious metal. Investors anticipate that the Fed will lower borrowing costs by 100 basis points this year.
Despite some positive economic news from China, with first-quarter growth of 5.4% exceeding expectations, trade tensions continue to overshadow market sentiment.
Investors now await comments from Federal Reserve Chair Jerome Powell for more clues on the interest rate path. His remarks will likely influence dollar dynamics and provide further direction for gold prices.
Some analysts suggest caution about further immediate price increases. The Relative Strength Index on daily charts shows slightly overbought conditions, which might warrant some consolidation or modest pullback before gold continues its upward trend.
Other precious metals also showed movement, with spot silver rising 2.4% to $33.07 an ounce. Platinum fell 0.3% to $957.05 and palladium dipped 0.1% to $970.43.
