Gold hit another fresh all-time record high on Friday with the spot price touching $3,079 before profit takers stepped in to send the price marginally below record levels.
Over the past year, the rally in gold has been powered by increasing global political risk and inflation concerns. However, today’s record high is mostly the consequence of concerns about Donald Trump’s use of tariffs and investors seeking a safehaven amid heighten uncertainty.
“Gold has been on another glittering run upwards as investors seek out safe havens for their money. The spike in prices to fresh record levels comes as the world braces for another round of US tariffs, and geopolitical uncertainty swirls,” explained Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The price of gold has also been helped by buying from central banks, particularly by China. Part of the appeal of gold is as a hedge against inflation, which is staying stubborn in some economies amid concerns US trade policy could push up consumer prices further.
“There are also ongoing concerns that governments across the world have piled up high levels of debt, which is associated with a rise in long-term inflationary expectations.”
Geopolitical risk continues to pull investors into gold with the Middle East conflict reigniting and Putin appearing to be playing games with the West over a ceasefire.
“While further steps towards a ceasefire in Ukraine could see prices ease off, violence continues in the Middle East,” Streeter explained.
“There is also a risk that geo-political tensions escalate as opportunities in the Arctic are eyed by the US and Russia. If there are any indications that China may be poised to become more aggressive against Taiwan, there could be to be a further pull towards the precious metal.”
There is a growing consensus that gold is the place to be, and today’s price action justifies this view.
“I remain happy to ride the bullish momentum wave higher for the time being,” said Michael Brown Senior Research Strategist at Pepperstone.