Gold prices hit record highs as trade tensions escalate
Gold reached a record level above $3,200 per ounce on Friday, driven by a weakening dollar and growing concerns about the escalating trade war. The most expensive of metals gained over 5 percent during the week. What’s next?
According to data from 3:01 AM Eastern Time, the spot gold price rose by more than 1 percent, reaching $3,214.92 per ounce, following a previous record high of $3,219.84. This data indicates that precious metals continue their impressive streak, noting an increase of nearly 21 percent since the beginning of 2025. Gold futures in the U.S. rose by almost 2 percent, reaching a value of $3,233.80.
Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany, explains the reasons behind this trend.
The risk of recession is growing, bond yields are rising sharply, and the U.S. dollar continues to weaken – all these factors strengthen gold's role as a hedge against crises and a shield against inflation, he explains in a conversation with the Reuters agency.
The dollar index fell to its lowest level in a decade, making gold priced in dollars cheaper for foreign buyers.
The trade war could drive up gold prices
A break in the trade war did not calm fears over the effects of Donald Trump's policy. Stock markets worldwide are still experiencing declines, and economic uncertainty has increased, further boosting the attractiveness of gold as a haven for investors.
Giovanni Staunovo, an analyst at UBS, predicts a further increase in gold prices.
We believe that gold has the potential for further increases – in an optimistic scenario, we are targeting $3,400-3,500 per ounce in the coming months, he indicated.
The increase in demand from central banks and increased flows to gold-backed ETFs also support this trend.
The outlook for monetary policy and precious metal prices
There are other reasons for the precious metal's increase in price. Data published on Thursday showed that inflation in the U.S. unexpectedly fell in March. The market now focuses on producer price data, which will be published at 8:30 AM Eastern Time, as they may provide clues about the future of the Federal Reserve’s monetary policy.
Experts predict that the Fed will resume interest rate cuts in June and likely reduce them by a percentage point by the end of 2025. The prospect of monetary policy easing further supports the prices of precious metals.
Other precious metals also noted increases. The spot price of silver rose by 0.4 percent to $31.31 per ounce, platinum gained 0.7 percent, reaching $944.35, while palladium increased by 1.9 percent to $925.43. All these metals benefit from the overall upward trend in the commodities market.
