Gold surged to an all-time high on Tuesday, with spot prices reaching $3,508.50 per ounce, as investors sought safety amid mounting global economic and geopolitical uncertainty. The precious metal has gained nearly 30% year-to-date, cementing its role as the go-to hedge in volatile markets.
Fed rate cut expectations add momentum
The rally has been fueled by growing bets that the Federal Reserve will cut interest rates in the coming months, lowering the opportunity cost of holding non-yielding assets like gold. Analysts note that political risks, including ongoing trade disruptions and concerns about central bank independence, have intensified demand.
Adrian Ash, director of research at BullionVault, told the BBC that much of the momentum stems from U.S. President Donald Trump’s policies:
“It was really the U.S. election last year that put a fire under it, along with what he’s done to geopolitics and global trade.”
Political risks driving safe-haven demand
Markets have also reacted to Trump’s repeated clashes with Federal Reserve Chair Jerome Powell and his attempts to remove Fed governor Lisa Cook, raising concerns over central bank independence.
Derren Nathan of Hargreaves Lansdown noted that Trump’s actions are “driving renewed interest in safe haven assets including gold.” Meanwhile, ECB President Christine Lagarde warned that political interference at the Fed would be a “very serious danger” to global stability.
Demand from China and India remains strong
Typically, gold price spikes are met with reduced jewelry demand from China and India — the world’s two largest physical gold markets. But this time, buyers are shifting into investment-grade products such as bars and coins, keeping demand elevated.
Multiple drivers behind record highs
According to Suki Cooper, precious metals analyst at Standard Chartered, gold’s rally reflects a combination of factors:
- Russia’s war in Ukraine
- Shifts in global trade policies impacting inflation and supply chains
- Periods of U.S. dollar weakness, which bolstered gold’s safe-haven appeal earlier this year
“Gold has found added support from USD weakness as the preferred safe haven,” Cooper said.
