Gold prices are experiencing a significant upswing as investors react to economic uncertainties, particularly surrounding U.S. import tariff plans. While the precious metal approaches the ambitious target of $3,000 per ounce, bearish indicators are also starting to surface.
Key Highlights:
Record Price Surge:
Gold (XAU) has started 2025 on a high note, achieving eight record highs and rising over 10% by February 11.
This follows its largest annual gain in 14 years in 2024, driven by strong central bank purchases, geopolitical tensions, and monetary policy easing.
Impact of U.S. Tariffs:
Newly elected President Donald Trump has implemented tariffs on steel and aluminum, which pushed spot gold prices to a record $2,942.70 per ounce.
Philip Newman from Metals Focus noted a shift in safe-haven buying motives, moving from Middle Eastern uncertainties to tariff-related concerns.
Market Dynamics:
The unexpected growth in gold prices occurred even as inflation eased, challenging traditional understandings of gold price behavior.
Analysts observed that gold was rallying despite a stronger dollar, indicating a decoupling from usual market pressures.
Supply Concerns:
Gold bulls are worried that U.S. tariff plans could disrupt gold supplies, leading to increased volatility in U.S. gold futures prices compared to London spot prices.
The premium for U.S. gold futures surged, reaching over $60 during the inauguration week, prompting significant deliveries to Comex gold inventories.
Liquidity and Market Adjustments:
As demand for gold surged, waiting times to withdraw gold from the Bank of England increased, highlighting a liquidity shortage in the London market.
However, by Tuesday, the Comex premium had narrowed to $28 per ounce, suggesting that the market is stabilizing.
Bearish Outlook:
Analysts predict that trading activity may decline as the situation surrounding tariffs becomes clearer.
Nicky Shiels from MKS PAMP SA believes that while gold prices could potentially reach $3,200, recent developments have strengthened the bearish outlook, with a forecast of $2,750 for 2025.
Jewelry Demand and Central Bank Purchases:
High gold prices have dampened jewelry demand, particularly in key markets like India and China, where discounts are being offered.
Emerging market central banks may reduce gold purchases if their domestic currencies weaken due to U.S. tariffs.
Technical Indicators:
Gold is currently in the overbought zone of its relative strength index, and analysts warn of potential resistance around the $3,000 milestone, recalling previous struggles to maintain levels above $2,000.