Surge! Gold hits new highs at the start of the year, just a step away from the $3,000 mark

According to the Zhitong Finance APP, U.S. President Trump announced a 25% tariff on all imported steel and aluminum, exacerbating the growing uncertainty in global financial markets and pushing gold prices to new highs. Following a nearly 1.7% increase the previous day, as of the time of writing, spot gold has risen above $2,930 per ounce, setting a new historical high; gold futures are hovering around $2,955 per ounce.

On the news front, on February 10 local time, Trump signed an executive order announcing a 25% tariff on all steel and aluminum imported into the United States. Trump also stated that there would be "no exceptions or exemptions" to the related requirements. He further indicated that tariffs on automobiles, chips, and pharmaceuticals would be considered.

As Trump's destructive actions in trade and geopolitics have strengthened gold's role as a store of value during uncertain times, gold prices have risen by 11% this year and have repeatedly set new highs.

Richard Franulovich, an analyst at Westpac Bank, pointed out that Trump's policies are unpredictable, imposing tariffs on both allies and adversaries, which enhances gold's appeal as a safe haven. Trump's remarks indicate a significant increase in the risks and uncertainties facing global financial markets, leading to increased demand for safe-haven investments.

The market is also trying to understand the potential impact on U.S. monetary policy if Trump's administration's policies lead to a resurgence of inflation and suppress economic growth. If the Federal Reserve maintains high interest rates for an extended period, it may further pressure gold investment demand.

Federal Reserve Chairman Jerome Powell will attend hearings in the Senate and House on Tuesday and Wednesday to testify on the semiannual monetary policy report and answer questions. Powell's remarks at the hearings may provide more clues about the Fed's interest rate path.

The market will closely monitor his views on the economic outlook, inflation targets, and interest rate policies. Powell stated in January that the Fed is not in a hurry to cut interest rates further. Analysts expect Powell to emphasize that the resilience of the economy is a key reason for the Fed's reluctance to lower rates further. Given the strong state of the U.S. economy, Fed officials also have time to assess the impact of the new Trump administration's changes in trade, immigration, and tax policies.

Gold prices set new highs 40 times in 2024

The World Gold Council's previous report on global gold demand trends indicated that driven by sustained strong central bank gold purchases and growing investment demand, the total global gold demand for 2024 (including over-the-counter trading) is expected to reach 4,975 tons, setting a new historical high. Record-high gold prices and demand levels are expected to push the total global gold demand to $382 billion in 2024.

Central banks around the world continue to play an important role in gold purchases. Data shows that in 2024, global central bank gold purchases will exceed 1,000 tons for the third consecutive year. In terms of gold investment, data indicates that global gold investment demand is expected to grow by 25% year-on-year to 1,180 tons in 2024, reaching a four-year high Louise Street, a senior market analyst at the World Gold Council, pointed out that gold prices hit new highs 40 times in 2024, once again becoming the focus of global attention. Louise Street stated, "In 2025, we expect that the demand for gold purchases by global central banks will continue to dominate, and investment demand for gold ETFs will become an important force supporting gold demand." "Geopolitical and macroeconomic uncertainties will be the theme of 2025, further supporting the demand for gold as a means of wealth preservation and a safe-haven tool."

Institutions Optimistic About Gold's Future

Many institutions expect that driven by factors such as trade frictions, geopolitical concerns, ongoing demand from central banks, and uncertainties in global economic growth, gold prices will continue to rise this year.

UBS recently raised its 12-month gold price forecast to $3,000 per ounce. UBS stated in its report, "Although we acknowledge that the current spot gold price is above our fair value estimate, the enduring appeal of gold as a store of value and a hedge against uncertainty has been reaffirmed."

Citigroup also adjusted its gold price expectations. The bank raised its 0-3 month target price for gold to $3,000 per ounce, maintained its 6-12 month target price at $3,000 per ounce, and increased its average price forecast for 2025 from $2,800 per ounce to $2,900 per ounce.

Goldman Sachs also set a gold price target of $3,000 per ounce. Goldman Sachs believes that due to the ongoing uncertainty in U.S. policies, there may be a long-term push for safe-haven demand from central banks and investors, which brings upward risk to the $3,000 per ounce gold price target