On February 1, the price of gold reached an impressive $2,800 an ounce, driven by traders’ concerns that President Trump's new tariffs on Chinese imports, along with potential future levies on Canada and Mexico, could reignite inflation.
By Tuesday, gold's spot price had surged to $2,844 an ounce, continuing its momentum after first crossing the $2,800 threshold on Friday and remaining above that level throughout Monday.
According to Jim Wyckoff, senior market analyst at Kitco, several factors have been contributing to gold's climb. These include "investor risk aversion and anxiety over potential trade tariffs and other disruptive policy moves by the Trump administration, increased central bank gold purchases, particularly from China, and bullish charts that are attracting speculators into the market."
Bank of America analysts recently highlighted in a research note that "tariffs create a strong tailwind for gold" due to their inflationary effects. They also noted that the U.S.'s increasingly hawkish foreign policy could accelerate global efforts to de-dollarize.
Bob Haberkorn, senior market strategist at RJO Futures, pointed out that while tariffs have been the "main driver" of gold's rise, the weak U.S. dollar is also contributing to the surge.
Looking ahead to 2025, analysts are predicting another strong year for gold. The London Bullion Market Association’s Precious Metals Forecast Survey revealed that two-thirds of analysts believe gold will surpass $3,000 an ounce next year. Overall, analysts forecast that the average price of gold will rise by 14.7% in 2025, reaching $2,736.7 an ounce.
So far, the predictions are proving accurate. Gold prices have risen 6.6% since the start of the year, following a massive 26% increase in 2024.
The price hike follows President Trump's recent announcement that he would impose a 25% duty on imports from Canada and Mexico, along with a 10% tariff on all goods from China. While tariffs on Canada and Mexico are currently on hold for at least 30 days, the tariff on China has been implemented, and it has triggered retaliatory measures, including a levy on U.S. coal and gas, as well as an antitrust investigation into Google.