Gold soared to a new record on Tuesday, surging above $2,800 per ounce and spotlighting investors' deepening concerns about geopolitical tensions and inflationary pressures. Spot gold rose 1.1% to $2,844.56 per ounce as of 1:40 p.m. ET, briefly hitting a historic $2,845.14 earlier in the session, while U.S. gold futures settled 0.7% higher at $2,875.80. This latest milestone follows a year of volatile trade skirmishes, with market watchers increasingly turning to bullion as a hedge against uncertainty.
The immediate catalyst came from renewed hostilities in the Sino-American trade dispute, after Beijing imposed fresh tariffs on U.S. imports-an abrupt reaction to President Donald Trump's higher duties on Chinese goods. In parallel, the dollar fell 0.9%, making gold more affordable for holders of other currencies. "The tariff news came out like it did overnight," said Bob Haberkorn, senior market strategist at RJO Futures. "I think right now that's the main driver... The dollar was strong going into the week, but with a lower dollar, that also definitely helps the price of gold."
Key Drivers for Gold's Rally:
- Resurgent Trade Tensions: China's new tariffs and antitrust probe into U.S. tech further strained U.S.-China relations.
- Weaker Dollar: The dollar index dropped sharply, easing gold's cost for global investors.
- Safety Demand: Mounting concerns about inflation and geopolitical upheaval pushed investors into safe-haven assets.
Some Federal Reserve officials on Monday cautioned that continued tariff escalations could heighten inflation risks, influencing monetary policy. Gold, which bears no yield, often gains in a low or uncertain interest-rate environment, as investors look for an alternative store of value. "Given the disruptive nature of the current U.S. administration creating market uncertainty, coupled with central banks possibly increasing gold purchases to diversify from U.S. dollar holdings, gold prices could reach $3,000 this year," said Jim Wyckoff, senior market analyst at Kitco Metals.
Trade negotiations briefly cooled with Canada and Mexico after Trump delayed imposing tariffs on those nations, but Beijing received no such reprieve. Instead, China retaliated with its own set of tariffs and launched a separate antitrust investigation into Google, underscoring a shift from China's earlier approach of reciprocal duties toward a more strategic and targeted response. Meanwhile, lingering questions remain about the longer-term impact on global growth, as new data showed U.S. job openings in December missed expectations at 7.6 million versus an anticipated 8 million.
Joy Yang, global head of index product management at MarketVector, told reporters that "gold remains the ultimate safe haven" amid the uncertain geopolitical landscape. She added that central bank demand, which supported gold rallies in 2024, looks set to remain strong in 2025.
Other precious metals responded to gold's surge, though their movements were mixed. Spot silver jumped 2.5% to $32.33 per ounce, bolstered by the same risk-off sentiment aiding gold. Platinum rose 0.4% to $967.94, while palladium slipped 1.3% to $994.