Gold Prices Surge Amid Trade War Concerns

Gold prices (XAU/USD) continued their upward momentum, reaching around $3,090 during early Asian trading on Monday. The precious metal remains near record highs, driven by fears of a global trade war following U.S. President Donald Trump’s latest tariff measures. Last week, Trump announced a 25% tariff on imported cars and light trucks, effective April 3, adding to existing tariffs on steel and aluminum. This has intensified economic uncertainty, boosting demand for gold as a safe-haven asset.

Inflation concerns further fueled gold’s rally. Data from the Bureau of Economic Analysis showed the U.S. core Personal Consumption Expenditures (PCE) Price Index rose 0.4% in February, surpassing the expected 0.3%. On an annual basis, core PCE climbed to 2.8%, suggesting persistent inflationary pressures. Additionally, Trump’s aggressive trade policies have raised concerns about potential stagflation, weakening the U.S. dollar and making gold more attractive to investors.

Market participants are closely watching the upcoming U.S. ISM Manufacturing PMI report for March, scheduled for release on Tuesday. A stronger-than-expected outcome could bolster the U.S. dollar and limit gold’s upside potential. However, geopolitical tensions have already spurred significant investor demand for gold. Over the weekend, reports surfaced that the Trump administration is considering broader tariffs, further driving safe-haven interest. Trump also expressed strong dissatisfaction with Russian President Vladimir Putin and threatened major tariffs on Russian oil, along with potential military action in Iran. His warning to Ukrainian President Volodymyr Zelensky regarding critical rare earth mineral deals has only added to market anxieties.

Gold’s rally was also supported by U.S. inflation data, which showed consumer spending increased 0.4% in February. Personal income grew 0.8%, and the University of Michigan’s consumer sentiment survey revealed inflation expectations at their highest level in over two years. While the U.S. economy faces slowing growth, persistent inflation, and stagflation risks, these factors have pushed gold prices to new highs.

China’s latest Purchasing Managers' Index (PMI) data showed a slight recovery, with the Manufacturing PMI rising to 50.5 and the Non-Manufacturing PMI increasing to 50.8. However, these figures had minimal impact on gold prices, as concerns over global economic instability outweighed China’s modest growth improvements.

Spot gold surged past $3,100 per ounce, reaching a record $3,128.06 before settling at $3,117.29 per ounce by 1307 GMT. The ongoing rally has pushed gold up nearly 19% this year, following a 27% gain in 2024. The demand remains strong, supported by central bank purchases, favorable monetary policies, and heightened geopolitical uncertainties. Analysts at Goldman Sachs raised their year-end 2025 gold forecast to $3,300 per ounce, with extreme market conditions potentially driving prices above $4,200. Bank of America also revised its forecasts, projecting gold to average $3,063 in 2025 and $3,350 in 2026.

In conclusion, gold’s record-breaking surge reflects deep-seated market anxieties over trade conflicts, inflation, and economic instability. As Trump’s tariff measures take effect and geopolitical tensions escalate, the demand for gold as a hedge against uncertainty continues to rise. While short-term fluctuations remain possible, analysts predict a sustained bullish trend for the precious metal in the foreseeable future.