Gold prices hit a new all-time high, surpassing $3,500 per ounce for the first time on Tuesday. The surge was driven by a weaker US dollar and escalating trade war fears, which have spurred increased demand for the precious metal as a safe haven.
Spot gold reached a peak of $3,500.05 during Asian trading hours before paring some of its gains. By 10:30 a.m. in New York, the price settled at $3,438.14, marking a 0.3% intraday increase. US gold futures also saw a 0.5% rise, trading at $3,444.60 an ounce.
Driving Factors Behind Gold’s Surge
Gold’s recent rally is a direct result of US President Donald Trump’s continued calls for the Federal Reserve to reduce interest rates. His remarks, which many view as a threat to the Fed’s independence, have contributed to the dollar falling to its lowest level since 2023. This weakening of the dollar, coupled with rising trade war fears, has fueled gold’s ascent.
Kamakshya Trivedi, head of global FX, rates, and emerging-market strategy at Goldman Sachs, noted that the rally indicates a desire among investors to diversify away from dollar-denominated assets and into broader safe-haven options. “Gold is now the only true safe haven left,” said analysts at Jefferies Financial Group, highlighting the growing lack of confidence in the US.
Gold’s Stellar Performance in 2025
So far this year, gold has surged by approximately 32%, outperforming nearly every other major asset class as investors seek refuge from the risks posed by the ongoing trade war. Traditionally, investors turn to US government debt during times of market volatility. However, with recent bond sell-offs and concerns over the US fiscal position, gold has emerged as the preferred safe-haven asset.
The rally began in early 2024 when central banks, seeking to diversify their foreign exchange reserves, became significant buyers of gold. In recent weeks, gold-backed exchange-traded funds (ETFs) have also seen an uptick in inflows, with major markets like China experiencing explosive growth in demand for the metal.
Goldman Sachs is among the banks that have become increasingly bullish on gold, forecasting that the metal could reach $4,000 an ounce by mid-2026.
Potential for a Correction
While gold’s performance this year has been exceptional, the rapid gains have raised concerns about the sustainability of the rally. A Bloomberg analysis notes that gold’s 14-day relative strength index (RSI), which measures the speed and magnitude of price movements, has surged above 78—indicating that the asset may be overbought. A reading above 70 often signals that an asset is due for a correction.
Dubai-based macro strategist Ven Ram acknowledged that while gold may be overbought in the short term, its long-term outlook remains strong. “Gold performs best when the global economy is in distress, and the scale of current economic uncertainty is immense,” he said, underscoring the metal’s role as a hedge during times of crisis.
Looking Ahead
As gold continues its ascent, the outlook remains volatile, with potential for short-term corrections amid the broader economic uncertainty. However, given the ongoing trade tensions, concerns about US monetary policy, and global economic instability, gold’s long-term appeal as a safe-haven asset is expected to remain strong. Investors will be closely watching for any signs of market corrections, while also keeping an eye on factors that could further fuel gold’s rise in the coming months.
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