Gold Breaks Records Again: Will the Uptrend Continue?

In 2024, $Gold Futures (AUG6) (GCmain.US)$ rose by 27%, the largest increase since 2010. In 2025, gold prices have continued to surge, with a cumulative rise of over 9% YTD. The spot gold price has broken through $2,882, reaching a new all-time high.

The increase in gold prices this year has been primarily driven by the policies implemented since Trump took office. These policies have intensified economic and geopolitical uncertainties, which in turn have bolstered the demand for safe-haven assets and fueled the sustained rise in gold prices.

Benefiting from the strong performance of gold prices, related gold stocks have also shown robust gains this year.

$Harmony Gold Mining (HMY.US)$ has surged by over 44% YTD. $AngloGold Ashanti (AU.US)$ and $Gold Fields (GFI.US)$ have risen by 38.56% and 36.82%, respectively. $Kinross Gold (KGC.US)$, $Agnico Eagle (AEM.US)$, and $Alamos Gold (AGI.US)$ have also seen significant increases, rising by 28.16%, 26.07%, and 21.10%, respectively.

Trump's 2.0 tariff policy, geopolitical risks, and central banks' continued gold purchases have become key factors supporting the sustained strength of gold prices.

Trump's 2.0 tariff policy has intensified the global economic uncertainty

Trump's 2.0 policy has confirmed that a 25% tariff will be imposed on goods from Mexico and Canada, and a 10% tariff on products from China.

These tariffs have sparked market concerns over an escalation in trade friction and increased global economic uncertainty. This uncertainty has driven investors to seek safe-haven assets, thereby pushing up gold prices.

The increase in tariffs could lead to inflation, which is generally seen as a positive factor for gold prices. This is because gold is considered a hedge against inflation.

Geopolitical risks enhance the demand for gold as a safe-haven asset

On April 4, former U.S. President Donald Trump stated during a meeting with the Israeli Prime Minister at the White House that the United States would take long-term control of the Gaza Strip and develop it. Saudi Arabia has strongly opposed this proposal. Some media outlets have suggested that Trump's statement is intended to complicate the next phase of ceasefire negotiations in Gaza.

Trump also expressed hopes for a new nuclear agreement with Iran and is expected to propose a plan to resolve the ongoing war in Ukraine next week, further escalating global tensions.

The escalating geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict have increased uncertainties. The demand for traditional safe-haven assets like gold continues to rise, which is a significant factor driving up gold prices.

The Bank of England's gold transactions are experiencing a rare discount

Concerns over the potential inclusion of precious metals in the tariffs threatened by Trump have sparked a gold-buying frenzy. Meanwhile, difficulties in extracting gold from the Bank of England’s vaults have led to its gold trading below the prevailing market price.

According to informed sources, dealers are currently quoting Bank of England gold at more than $5 per ounce below the London spot gold price.

Traders say that typically, the premium or discount on gold per ounce affected by central bank trading activities rarely exceeds a few cents. However, this price dislocation has occurred as global traders rush to ship gold to the U.S. ahead of possible trade policy changes to capture a premium.

Global central banks continue to purchase gold

In 2024, global central banks accelerated their gold purchases, with the total amount exceeding 1,000 tons for the third consecutive year. The fourth-quarter gold purchases surged to 333 tons, pushing the annual total to 1,045 tons.

The National Bank of Poland was the largest net buyer in 2024, increasing its gold reserves by 90 tons; the Central Bank of Turkey added 75 tons; and the Reserve Bank of India ranked third with a total purchase of 77 tons.

Louise Street, Senior Market Analyst at the World Gold Council (WGC), said:

In 2025, we expect central banks' gold demand to remain dominant.

A WGC report showed that global gold demand increased by 1% last year to a record high of 4,974.5 tons. The continuous increase in gold reserves by central banks further pushed up gold prices on the demand side.

Institutional outlook on gold prices

Most investment banks are optimistic about gold prices in 2025, expecting the price to continue rising, with many predicting it will reach $3,000 per ounce.

Citigroup believes that further tariff escalations will lead to a bullish outlook for gold within 6 to 12 months, with the price rising to $3,000 per ounce.

UBS expects central banks around the world to continue actively purchasing gold over the next year and has raised its gold price forecast for the next 12 months to $3,000 per ounce.

JPMorgan Chase argues that if U.S. policies become “more disruptive” in the form of higher tariffs, increased trade tensions, and greater risks to economic growth, gold prices will gain more momentum, with the price expected to reach $3,000 per ounce by the end of 2025.

Goldman Sachs believes that trade tariff escalations and U.S. debt issues are the main risk factors driving gold prices higher. Gold is primarily driven by structural factors (central bank purchases) and cyclical factors (ETF buying). It expects gold prices to reach $3,000 per ounce by the second quarter of 2026.

Source: Moomoo, Bloomberg

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