Gold prices extended their gains on Tuesday, driven by investor demand for safe-haven assets amid growing uncertainty over U.S. tariff policies under President Donald Trump. Spot gold rose 0.6% to $2,913.79 an ounce as of 07:14 GMT, while U.S. gold futures climbed 0.9% to $2,925.50.
The rally follows concerns that Trump's tariff strategy-marked by the imposition of a 10% tariff on Chinese imports, threats of 25% duties on steel and aluminum, and plans for reciprocal tariffs on countries taxing U.S. goods-could escalate into a broader trade war. "We've seemingly got pretty significant central bank buying and that we've also got these potential shortages in Europe on the basis that there seems to be a rush to get gold in the U.S., to avoid possible tariffs," said Kyle Rodda, a financial market analyst at Capital.com. "I think the trend remains bullish for gold-the fundamentals are good."
Goldman Sachs raised its year-end gold price forecast to $3,100 per ounce from its previous estimate of $2,890, citing "structurally higher" central bank demand. The bank also warned that continued policy uncertainty and tariff fears could push prices as high as $3,300 per ounce by the end of 2025.
The ongoing rally in gold has positioned the metal as a key hedge against economic instability. Year to date, gold prices have climbed 9.7%, reaching record highs after a 43% surge over the past year. Investors have increasingly sought refuge in gold amid fluctuations in the equity markets, where the S&P 500 and Dow Jones Industrial Average have posted respective gains of 20% and 15% over the same period.
Gold's strong performance has also fueled gains in gold-related stocks. Shares of Barrick Gold have risen 16% this year, while the SPDR Gold Shares ETF has gained 10%. Barrick Gold, in particular, has benefitted from the record-breaking gold market, reporting its highest net earnings in a decade. The company's fourth-quarter operating cash flow increased 18% to $1.4 billion, bringing its full-year total to $4.5 billion-the highest since 2020. Barrick spent $500 million on share buybacks and distributed $700 million in dividends last year.
"Gold is becoming more important as a safe haven in a geopolitically uncertain world," Barrick Gold CEO Mark Bristow said during an earnings call last week. "Needless to say, it's an exciting time to be a gold and copper miner with more upside in the commodity price, in my opinion, anyway."
Despite the bullish outlook, some market strategists warn that gold prices may soon face a short-term correction. "There are signs of short-term exhaustion," said Michael Reinking, a strategist at the New York Stock Exchange. Veteran trader Kenny Polcari echoed this sentiment, stating, "It feels a bit tired to me ... it feels a bit stretched ... so while I like gold as part of a portfolio, I am not chasing it up here."
Beyond the tariff-driven market fluctuations, traders are also closely monitoring the Federal Reserve's upcoming January meeting minutes, set to be released Wednesday. The minutes may offer insight into policymakers' views on inflation risks and potential interest rate adjustments. Fed Governor Michelle Bowman on Monday signaled a cautious approach to rate cuts, stating she wanted "increased conviction that inflation will ease further this year before lowering interest rates again."
Meanwhile, the broader precious metals market showed mixed performance. Spot silver declined 0.9% to $32.50 an ounce, while platinum rose 0.9% to $985.20. Palladium saw the biggest gain, climbing 1.6% to $978.00 an ounce.
