Gold price explodes amid escalating trade tensions, breaking through the crucial $3,200 mark

Gold price explodes amid escalating trade tensions, breaking through the crucial $3,200 mark

MALAYSIA, April 21, 2025 – The ongoing turmoil in global trade has driven the price of gold to new heights. At the start of today’s trading session, the precious metal reached a remarkable all-time high of $3,219.84 per ounce, representing an increase of over one percent. In the second week of April alone, gold recorded an impressive increase of around five percent.

Already on Friday, April 11, 2025, the price of gold broke through the psychologically important threshold of $3,200 per troy ounce for the first time. This significant move was largely fueled by a weakening US dollar and escalating international trade conflicts, which drove investors into traditionally safe havens.

The spot price of gold climbed 0.7 percent to $3,195.09 per ounce. Gold bars, in particular, experienced a price jump of over one percent at the start of trading, reaching a new record high of $3,219.84. This development underscores the precious metal’s continued attractiveness in an uncertain market environment. At the same time, US gold futures rose a remarkable 1.1 percent to $3,213.40.

“The current momentum is largely driven by significant weakness in the US dollar. This reflects a continued shift of capital out of US dollar-based investments, with equities and bonds, in particular, under considerable selling pressure amid uncertain tariff policy,” commented a senior financial analyst at TCME Group Worldwide.


US Dollar Under Pressure

The US dollar fell 0.5 percent against a basket of major currencies. This weakness in the greenback made gold traded in US dollars cheaper for buyers outside the dollar zone, thus contributing to rising demand.
At the same time, global equity markets recorded broad losses after US President Donald Trump unexpectedly raised tariffs on imports from China to 145 percent. It is noteworthy, however, that a 90-day suspension of previously announced tariffs also came into effect for a number of other countries at the same time, underscoring the complexity of current trade policy.

China’s Reaction and Further Price Drivers

China’s reaction to the recent tariff increases from the US was not lacking, fueling fears that Beijing, in turn, could further raise tariffs against the United States beyond the current 84 percent.
“The next psychological level that market observers are watching is US$3,500 per ounce. However, it seems unlikely that this level will be reached immediately and without significant resistance,” according to the TCME Group Worldwide assessment.

In addition to escalating trade tensions, other factors are contributing to the current strength of the gold price. These include continued purchases by central banks, growing expectations of interest rate cuts by the U.S. Federal Reserve, geopolitical instability in the Middle East and Europe, and significant inflows into gold-backed exchange-traded funds (ETFs).

Although U.S. consumer prices declined unexpectedly in March, underlying data indicate persistent inflation risks. Market participants now largely expect the Federal Reserve to resume its interest rate cutting cycle in June and reduce key interest rates by an expected full percentage point by the end of 2025. This expectation of loose monetary policy further supports the attractiveness of gold as a non-interest-bearing asset.

TCME Group Worldwide will continue to closely monitor further developments in the global financial markets and their impact on the gold price and inform its clients accordingly.

 


 

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