Gold has surged to a new all-time high, topping US$3,045 per ounce, as investors turn to the metal as a safe-haven asset. The rise is driven by a combination of geopolitical tensions, trade war fears, and expectations of US Federal Reserve policy shifts. That’s a rise of around 24% over the year, or 90% over five years.
Geopolitical Risks Push Gold Higher
Gold’s status as a store of value in uncertain times has been reinforced by rising tensions in the Middle East. Israeli airstrikes in Gaza have escalated the conflict, while a ceasefire proposal between Russia and Ukraine, brokered by US President Donald Trump and Vladimir Putin, remains uncertain. Investors are also reacting to concerns over China-US trade disputes, with Trump’s new tariffs sparking fears of economic retaliation.
Fed Decision Looms Over Gold’s Next Move
The US Federal Reserve’s monetary policy decision is a key factor influencing gold prices. The Fed is expected to pause interest rate cuts, but traders will watch for signals on future rate moves. If Chair Jerome Powell signals a more cautious stance on rate cuts, gold could pull back as the US dollar strengthens. However, if the Fed reaffirms plans for multiple cuts in 2025, gold may rally further.
Investor Demand Fuels Rally
Gold-backed exchange-traded funds (ETFs) have seen five consecutive days of inflows, reversing a four-year trend of declining holdings. Some analysts now expect gold to hit $3,600 per ounce, while others caution that $3,000 could act as a short-term resistance level.
