President Donald Trump has sparked a rally in gold prices by threatening to impose a 25% tariff on Mexico and Canada. The remarks sparked a rally in the precious metal often considered a safe haven In times of soaring geopolitical tensions or uncertainties. Likewise, the metal is headed for a fifth consecutive week of gains while staring at new record highs above the $2,800 an ounce level.
Gold Tariff Boost
In an attempt to persuade manufacturers to produce computer chips, pharmaceuticals, and steel domestically, Trump has alluded to plans to impose tariffs on these imports. In addition to being seen as inflationary, Trump’s policies may lead to trade wars, raising demand for bullion as a safe haven.
Investors are increasingly flocking to the precious metal amid the heightened US tariff concerns while awaiting a key inflation report that could provide insight into the US Federal Reserve’s action on interest rates. The central bank kept rates steady at its January meeting, insisting that inflation and jobs data determine the following action.
Short-term interest rate futures indicated that investors anticipate the Fed delaying rate cuts until June following the release of the central bank statement. Fed Chair Jerome Powell stated that the central bank will take its time evaluating the implications of the new government policy regime and that it is too soon to predict what President Donald Trump’s policies will accomplish. Last week, Trump’s call for lower interest rates caused gold prices to approach all-time highs. Because it doesn’t pay interest, bullion usually does well in an environment with low interest rates.
Since late November, 12.9 million troy ounces of gold have been delivered to COMEX-approved warehouses GC-STX-COMEX, increasing their stock by 73.5% to 30.4 million ounces, the highest level since July 2022, amid worries about Trump’s tariff plans. Tim Waterer, chief market analyst at KCM Trade, stated that if tariff threats turn from a negotiating tactic to an economic reality, gold may see further gains. He also added that prices may reach new highs above the $2,800 mark.
In 2024, gold produced impressive returns, rising by over 25% and reaching its highest point ever. The strength that the precious metal has experienced over the last five years, when its price has increased by more than 70%, is reinforced by those gains. Many analysts value gold due to its inherent worth and use in various sectors.
Gold Eye’s 3000
By the end of 2025, gold prices could surpass $3,000 per ounce, according to research from Goldman Sachs. According to this forecast, gold’s momentum is expected to continue. Central banks’ gold holdings are mentioned in the report as a bullish catalyst for the precious metal.
According to Goldman Sachs’ research, federal debt is another factor influencing gold’s price. The United States owes over $36.383 trillion, with interest payments accounting for a larger percentage of that total. Gold should keep rising as interest payments account for a larger portion of debt-related costs.
Additionally, falling interest rates may encourage more investors to take out new loans. According to research by Goldman Sachs, inflows into gold ETFs typically rise when interest rates decline. When a bullish indicator is present, some people might feel compelled to invest more money in the asset, while others might take out a loan to expand their holdings.
