Gold has surged to a record high, with spot prices trading at approximately $3,132 per ounce as of 1:00 PM WAT. Data from commodity tracking platform GoldPrice.com indicates that the precious metal closed at $3,118 per ounce on March 31.

Since the start of the year, gold has gained 19.8%, having opened 2025 at $2,625 per ounce.

The rally is largely driven by heightened uncertainty in the global financial markets, prompting investors to seek safe-haven assets as a hedge against economic volatility. Meanwhile, the equities market has struggled, with the S&P 500 posting its worst first-quarter performance since 2022, declining 4.37% year-to-date. The Dow Jones Industrial Average also ended Q1 with a 0.92% drop, despite a brief mid-March rally.

These movements in the US and global financial markets are down to erratic nature of Donald Trump?s policy positions. Since assuming the US presidency on January 20, he launched a tirade against some of America?s closest trade partners, threatening tariffs on good imported from Mexico, Canada, and China.

The 25% tariffs on goods from Canada and Mexico took effect on March 4, prompting Canada to impose retaliatory measures in response. Simultaneously, President Trump escalated trade tensions by implementing additional tariffs on Chinese imports, targeting all the United States? largest trading partners.

Amid these escalating trade disputes, the U.S. has struggled to de-escalate the ongoing Russia-Ukraine conflict, further unsettling the global trade landscape. The mounting geopolitical uncertainty continues to challenge international markets and economic stability.

In February, the US consumer price index declined to 2.8 percent, its lowest since November 2024. However, it did little to ease concerns about a looming recession in the U.S. economy.

As uncertainty looms, Goldman Sachs projected that gold price may hit $3,300 by the end of 2025. Daan Struyven, the co-head of global commodities research at Goldman Sachs, highlighted that dropping rates is a contributory factor to the rally in gold prices.

Struyven also attributed the rally to the five-fold increase in the gold purchases by the Russian central bank.

Speaking to CNBC International, Struyven said,

?The rally began in mid-2022, driven by the freezing of Russia?s central bank reserves and a fivefold increase in central bank gold purchases. This structural shift has been a key factor in sustaining the rally.?

He continued, ?Over the past two months, there has been a significant rise in ETF inflows, fueled by declining interest rates and uncertainty surrounding U.S. policy. More recently, in the last few weeks, a surge in speculative positioning pushed gold prices past the $3,000 mark. These three factors, operating over different time horizons, have collectively driven gold to an all-time high.?

?Looking ahead, further gains are expected, with gold prices projected to reach $3,300 per troy ounce by year-end, with potential upside risks to an even more bullish forecast.? (BusinessDay)

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