As markets and investment assets are trapped in an uncertain state of limbo, gold prices reached a record high on Tuesday. Gold futures hit a record $3,177 per ounce, this is an 18% increase since the start of 2025. What are the factors at play in this gold price all time high?
This surge contrasts with a 4% decline in the S&P 500 in the same time period. A stark contrast and remainder that investors often turn to “safe haven assets” in times of economic uncertainty. Economic uncertainty may be an understatement for the current climate as American tariffs and global conflicts create an atmosphere of tension in global financial markets.
Tariffs Fuel Gold Rush
Gold prices have been steadily climbing for years, but they’ve truly taken off since the start of 2025. According to Michael Widmer, head of metals research at Bank of America, this upward trend is far from over. In a recent report, he predicted that gold could reach $3,500 per ounce within the next 18 months.
Widmer explained in an interview with NPR that while several factors have fuelled gold’s long-term rise, the recent spike is largely due to fears and uncertainty surrounding tariffs. Widmer also stated “It’s those tensions — the uncertainty about economic policies or the policy uncertainty — that have really been supportive for the gold market,”.
Fools Gold?
While gold has often heralded as a safe investment, Widmer warns that it’s not immune to volatility. It may not be as risky as stocks and particularly its digital counterpart Bitcoin. It is important to remember there is no such thing as a 100% safe investment.
Still, gold has earned its reputation as a go-to asset in times of uncertainty earning the title of the “fear trade.” Unlike stocks or other financial assets, gold’s physical and practical value make it much more resilient to market turbulence and crashes. We will see if Widmer’s prediction will come true and if this gold price all-time high is just a stepping stone to yet higher prices as investors and the market brace for a possible year of further losses.
Sources
Reuters – Gold holds near record peak as investors await Trump tariff plan
Barron’s – Risk Off Trade Is Getting Crowded. It’s More Worry Than Panic.
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