Gold Prices Soar as Trade Tensions Escalate
As global trade tensions continue to simmer, gold prices have reached new heights, with bullion futures surging past $2,860 per ounce on Friday. This marks the fifth consecutive week of gains, with no signs of slowing down.
Tariff Threats Fuel Gold Rally
The looming threat of US tariffs against Mexico and Canada has sparked a surge in gold prices, as investors seek safe-haven assets to hedge against potential economic uncertainty. Goldman Sachs analysts have reiterated their bullish call on gold, citing elevated US policy uncertainty and the diversifying role of commodities in investment portfolios.
Gold as a Hedge Against Tail Risks
According to Goldman analysts, gold is an attractive hedge against several tail risks, including tariff escalations and US debt fears. With President Donald Trump set to impose a 25% tariff on imports from Mexico and Canada, the potential for a trade war and its impact on economic growth has investors seeking shelter in gold.
Defying Federal Reserve Expectations
Despite the Federal Reserve’s decision to hold interest rates steady, gold prices have continued to rise. This defies traditional expectations, as lower interest rates typically spur more buying of the asset. However, the current market dynamics have created a perfect storm for gold, with strong demand from foreign central banks and inflows into physically backed gold exchange-traded funds (ETFs) driving prices higher.
Long-Term Outlook Remains Bullish
Goldman analysts remain confident in their $3,000 per troy ounce price forecast for the second quarter of 2026, driven by structural and cyclical factors. Central bank buying and ETF inflows are expected to continue, supporting gold prices in the long term. With trade tensions showing no signs of easing, gold is likely to remain a safe-haven asset of choice for investors.
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