Gold Prices Surge to New Heights

By Ashitha Shivaprasad and Anjana Anil

(Reuters) – Gold’s remarkable run higher has reached new heights, with the market touching $3,500 per ounce as confidence in the U.S. economy erodes following President Trump’s renewed attacks on the Federal Reserve chair.

Spot gold was trading around $3,428 per ounce by 1417 GMT, after hitting a record $3,500.05 earlier in the session.

Trump stated on Monday that the U.S. economy could slow down unless interest rates are immediately lowered, continuing his criticism of Fed Chair Jerome Powell, whom he labeled a “major loser” for his slow action.

This led to a significant withdrawal from U.S. assets, impacting Wall Street and the dollar, while concerns about the independence of the Federal Reserve added pressure on Treasuries.

> “Gold is recalibrating to reflect what can only be described as epic changes in the global financial system. A widespread and fundamental shift in confidence in the world’s reserve currency and its bond markets,” said independent analyst Ross Norman.

Bullion, known as a hedge against uncertainties and a highly liquid asset, has surged over $800 since the year’s beginning. It surpassed $3,300 last Wednesday, with a strong momentum pushing it up nearly $200 in just a few days.

Central Bank Demand

Adrian Ash, director of research at BullionVault, stated that central bank demand is likely driving gold’s rise, as the political chaos under Trump enhances gold’s appeal as a geopolitical asset.

In the last quarter of 2024, coinciding with Trump’s election win, central bank purchases surged 54% year-on-year to 333 tons, as per estimates from the World Gold Council. Data revealed that China’s central bank added gold to its reserves in March for the fifth consecutive month and is considering establishing overseas warehouses for international settlements on the Shanghai Gold Exchange.

Correction Likely To Be Short-Lived

Earlier this month, Goldman Sachs raised its year-end gold forecast to $3,700, projecting a potential rise to $3,810 by the end of 2025 if central bank buying averages 100 tonnes/month. Additionally, ANZ last week increased its year-end gold price forecast to $3,600.

When asked about a possible pause in the rally, analysts indicated that any correction will likely be short-lived, with greater gains anticipated if instability persists.

> “It is currently hard to envision a scenario where gold would sharply correct lower, given the physical floor of recent buyers supporting price stability,” stated Norman.

Carsten Menke, analyst at Julius Baer, noted that a major barrier for gold would be a less confrontational President Trump, either in trade or monetary policy, both of which seem unlikely at present.

So far in 2025, spot gold has reached 28 record highs, with 16 above the $3,000/oz mark. Prices have increased 31% year-to-date after closing 2024 with a 27% annual rise.