Why gold price surges to all-time high
As the precious metal reaches record highs, AFP explains why it remains such a trusted lifeline. The trading turmoil unleashed by US President Donald Trump's tariffs has triggered a record run for gold, widely viewed as a safe-haven investment.
On Friday, it struck an all-time high of $3227.51 an ounce in trading, handing the commodity a gain of more than 20 percent since the start of the year.
- Additional Trump benefit - "So far, precious metals bullion is exempt from US tariffs and this is probably because they are not seen as core industrial products," Frank Watson, senior metals analyst at trading platform Kinesis Money, told AFP.
The aim of Trump's tariffs is to support American output and reduce the US trade deficit, which taxing gold would fail to achieve.
After gold struck a record high at the start of April when Trump unleashed his reciprocal tariffs, investors sold off the metal to gain necessary liquidity amid tumbling stock markets.
This caused gold to weaken briefly before rebounding. The metal meanwhile avoided fresh declines after Trump on Wednesday surprisingly paused his tariffs for dozens of countries, except China.
- Dollar retreat -
The US currency has retreated strongly against main rivals in the wake of Trump's tariffs, further boosting gold's attractiveness.
Gold is "an important risk-management asset held by entities including central banks and financial institutions as well as retail investors", said Watson.
Markets are concerned about the impact of a global trade war on growth and are betting that the US Federal Reserve will announce further cuts to interest rates to support activity in the world's biggest economy.
This is despite the tariffs threatening a fresh spike to inflation, which ordinarily would see central banks looking to hike interest rates. Such expectations of lower borrowing costs are adding to the pressure on the dollar as well as for US government bonds, which are losing some of their safe-haven status.
- Rare tangible asset - Gold profits also from the fact that it is a rare and tangible asset. While the majority of people will never own a gold bar, they can get their hands on a piece of gold jewellery. "People want a tangible asset that they can own," said John Reade, a strategist at the World Gold Council. In an interview with AFP, he added that gold has proven to be an asset investors and savers seek when losing confidence in governments and banks, even if it means earning no dividends or interest on their investment. "Gold is incredibly rare and doesn't corrode, making it the ultimate long-term store of value," noted Watson.
- Central bank craze -
Gold is prized by central banks, which contribute to inflating its price by filling vaults with bullion to hedge against hardship, stabilise currencies, and use as collateral for loans and transactions. In 2024, global central banks together added more than 1,000 tonnes of gold to their reserves for the third year running, according to the World Gold Council.
"This move was triggered by the invasion of Ukraine and the subsequent confiscation of Russian reserves," according to Charlie Morris, an analyst at investment research group ByteTree. Following Moscow's invasion of Ukraine in February 2022, the Russian central bank's foreign exchange reserves held abroad were frozen under international sanctions.
The war in Ukraine, followed by the conflict in Gaza, has exacerbated geopolitical uncertainties, further increasing gold's appeal.
Investor appetite for gold has been robust. Global gold-backed ETFs saw massive inflows of US$21 billion (226 tonnes) in the first quarter of 2025, the second-highest quarterly dollar inflow ever recorded, according to market data.
Gold remains my largest holding, the outlook looks bullish over the next 100 days. The combination of tariff-induced inflation risks and ongoing geopolitical uncertainty provides a robust foundation for gold prices.
While the immediate pause of some tariffs brought some calm to wider markets, the underlying drivers that propelled gold higher– including persistent geopolitical uncertainty focused on US-China trade tariffs, the potential inflationary pressures from tariffs, and questions around.
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