Gold prices surged to a two-week high on Tuesday, driven by strong post-holiday demand from China and growing uncertainty surrounding US trade tariffs.
Spot gold rose by 1.6% to $3,388.81 an ounce by 10:45 a.m. ET, briefly approaching the $3,400 mark earlier in the session. Three-month US gold futures also saw an increase of nearly 2.1%, reaching $3,392.60 per ounce.
The rally coincided with the resumption of trading in China, the world’s largest gold consumer, following its early May holiday. Data from the Shanghai Futures Exchange revealed record-high trading volumes in recent weeks, signaling robust investor activity.
Adrian Ash, director of research at BullionVault, attributed the bull market to a surge in gold investments in China, combined with central banks’ ongoing efforts to reduce their exposure to US assets, particularly the US dollar. “The bull market is being driven by China’s latest gold investing surge, plus the ongoing bid from central banks wanting to cut their exposure to US assets, most especially the dollar,” Ash explained.
Meanwhile, the US dollar, which is often viewed as a safe haven like gold, continues to face challenges as investors grow cautious about potential trade deals and their impact on the global economy.
TD Securities commodity strategist Daniel Ghali observed increased speculative activity from China, noting that gold remains significantly under-owned in Western markets despite its recent price surge. He added that these factors are likely to support further increases in gold prices.
Gold has been on an upward trajectory since US President Donald Trump’s implementation of sweeping tariffs, which contributed to market volatility. The precious metal has gained more than 25% in value this year, including a record-high price above $3,500 just two weeks ago.
Many analysts and banks predict further price increases. JPMorgan recently forecast gold could reach $4,000 an ounce by the second quarter of 2026, with an average of $3,675 per ounce by the end of 2025. Ghali also suggested that gold prices could hit $4,000 this year.
Investors are now closely watching the US Federal Reserve’s policy decision on Wednesday, as it may provide insights into potential interest rate cuts, which could further enhance gold’s appeal.
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