Tweedle Tip: Silver Should Also Climb on Stagflation Fearsđâźď¸â ď¸
WSJâGold exceeded $3,000 a troy ounce for the first time ever on economic uncertainty and safe-haven demand, and looks well-placed to keep benefiting from these factors in the long run.
Continuous gold futures on the New York Mercantile Exchange rose 0.3% to $2,999.30 a troy ounce in European evening trading, having reached as high as $3,017.10 a troy ounce earlier in the session. The prior record of $2,974.0 an ounce was set in late February.
The recent rally principally reflects uncertainty around U.S. tariff policies, amplifying economic risks and market volatility. This has driven investor interest in gold as a key portfolio hedge, World Gold Council senior market strategist John Reade said.
President Trump Thursday threatened a 200% tariff on all U.S. imports of European Union alcoholic beverages. This came in response to the EUâs own retaliatory tariffs on American whiskey, motorcycles, motorboats and a range of other products starting in April.
âHistorically, gold fares very well on a relative basis during market calamities given itâs âsafe havenâ status and liquidity. Until we get some clarity on tariffs, trade policies and geopolitical relationships, gold should continue to benefit,â Sprott Asset Management Chief Executive John Ciampaglia said.
Concerns over the U.S. economyâs stability and geopolitical worries are also driving goldâs rally.
A cooling labor market and slowing inflation could push the Federal Reserve to ease monetary policy, potentially pushing gold even higher, Tickmillâs Joseph Dahrieh said. Lower interest rates typically increase the appeal of non-interest bearing bullion, and the market currently expects around 70 basis points of cuts over the course of 2025, ING said.
Geopolitical fears are also high, spurring additional safe-haven demand. Russia rejected an immediate truce in Ukraine, while expressing willingness to discuss an end to the conflict. European Union leaders are devising measures to boost defense spending across the bloc, while some European countries like the U.K. are already setting out plans to increase military budgets.
Goldman Sachs analysts said they see upside risk to their $3,100 an ounce base case scenario for gold at the end of 2025 on U.S. policy uncertainty and elevated central bank buying since the freezing of Russian central bank reserves in 2022. The bank added it believes this will be the case even after a potential Russia-Ukraine cease fire, given the precedent set by the freezing of Russian assets.
Given goldâs safe-haven status, it should play a small role in most investorsâ portfolios as a strategic hedge.
âWith the heightened market volatility we are seeing, the case to own some gold remains compelling,â Ciampaglia added.
Longer-term drivers are still at play, too. Central-bank demand has been crucial to goldâs gains as banks diversify their reserves on de-dollarization efforts, sanctions and inflation concerns. While central banks have been net buyers for more than a decade, purchases have surged over the past three years, with more than 1,000 metric tons of gold bought annuallyârising to 1,045 tons at the end of 2024, according to the World Gold Council.
âAs global fragmentation continues, central bank buying will remain a strong pillar of demand and shape the marketâs long-term dynamics,â Reade said.
The $3,000 an ounce level is a somewhat arbitrary psychological level which might act as a short-term barrier to gold climbing higher, Keith Watson, co-founder of investment company Golden Prospect Precious Metals said. On the other hand, geopolitical risks remain elevated and tit-for-tat trade policies are set to continue, so on this basis, the outlook for gold remains broadly supportive, he said.
âWe would argue more so for operationally geared equities whose performance has lagged the broader upward momentum seen in the gold price itself,â said Watson.
Gold miners have benefited from the record high, with shares in Newmont, Barrick Gold and Anglo American up 1.85%, 0.85% and 3.1% respectively in European evening trading.
WSJâGold exceeded $3,000 a troy ounce for the first time ever on economic uncertainty and safe-haven demand, and looks well-placed to keep benefiting from these factors in the long run.
Continuous gold futures on the New York Mercantile Exchange rose 0.3% to $2,999.30 a troy ounce in European evening trading, having reached as high as $3,017.10 a troy ounce earlier in the session. The prior record of $2,974.0 an ounce was set in late February.
The recent rally principally reflects uncertainty around U.S. tariff policies, amplifying economic risks and market volatility. This has driven investor interest in gold as a key portfolio hedge, World Gold Council senior market strategist John Reade said.
President Trump Thursday threatened a 200% tariff on all U.S. imports of European Union alcoholic beverages. This came in response to the EUâs own retaliatory tariffs on American whiskey, motorcycles, motorboats and a range of other products starting in April.
âHistorically, gold fares very well on a relative basis during market calamities given itâs âsafe havenâ status and liquidity. Until we get some clarity on tariffs, trade policies and geopolitical relationships, gold should continue to benefit,â Sprott Asset Management Chief Executive John Ciampaglia said.
Concerns over the U.S. economyâs stability and geopolitical worries are also driving goldâs rally.
A cooling labor market and slowing inflation could push the Federal Reserve to ease monetary policy, potentially pushing gold even higher, Tickmillâs Joseph Dahrieh said. Lower interest rates typically increase the appeal of non-interest bearing bullion, and the market currently expects around 70 basis points of cuts over the course of 2025, ING said.
Geopolitical fears are also high, spurring additional safe-haven demand. Russia rejected an immediate truce in Ukraine, while expressing willingness to discuss an end to the conflict. European Union leaders are devising measures to boost defense spending across the bloc, while some European countries like the U.K. are already setting out plans to increase military budgets.
Goldman Sachs analysts said they see upside risk to their $3,100 an ounce base case scenario for gold at the end of 2025 on U.S. policy uncertainty and elevated central bank buying since the freezing of Russian central bank reserves in 2022. The bank added it believes this will be the case even after a potential Russia-Ukraine cease fire, given the precedent set by the freezing of Russian assets.
Given goldâs safe-haven status, it should play a small role in most investorsâ portfolios as a strategic hedge.
âWith the heightened market volatility we are seeing, the case to own some gold remains compelling,â Ciampaglia added.
Longer-term drivers are still at play, too. Central-bank demand has been crucial to goldâs gains as banks diversify their reserves on de-dollarization efforts, sanctions and inflation concerns. While central banks have been net buyers for more than a decade, purchases have surged over the past three years, with more than 1,000 metric tons of gold bought annuallyârising to 1,045 tons at the end of 2024, according to the World Gold Council.
âAs global fragmentation continues, central bank buying will remain a strong pillar of demand and shape the marketâs long-term dynamics,â Reade said.
The $3,000 an ounce level is a somewhat arbitrary psychological level which might act as a short-term barrier to gold climbing higher, Keith Watson, co-founder of investment company Golden Prospect Precious Metals said. On the other hand, geopolitical risks remain elevated and tit-for-tat trade policies are set to continue, so on this basis, the outlook for gold remains broadly supportive, he said.
âWe would argue more so for operationally geared equities whose performance has lagged the broader upward momentum seen in the gold price itself,â said Watson.
Gold miners have benefited from the record high, with shares in Newmont, Barrick Gold and Anglo American up 1.85%, 0.85% and 3.1% respectively in European evening trading.