As a series of tariffs and foreign policies since Trump took office have triggered chaos at the economic and geopolitical levels, creating the perfect environment for safe-haven asset gold to rise.
The price of gold has set a new record high above $3,000 this week, with spot gold standing at $3,080 per ounce. Now it seems likely that gold prices will continue to rise to $3,100 per ounce soon.
Trump signed an order in the White House on the 26th, announcing that he would impose 25% tariffs on all cars manufactured outside of America, and investors’ concerns about the possible expansion of the trade war are getting stronger, further stimulating safe-haven demand.
The gold market is on track to end the first three months of the year with an 18 per cent gain, which would be the biggest quarterly gain since July 1986. Meanwhile, the S&P 500 could face a 5% decline, which would be its worst quarterly performance since July 2022.
Last week, commodities analysts at Bank of America already raised their price forecasts for gold over the next two years, ultimately pegging the price at $3,500 by 2027.
Goldman Sachs now expects the price of gold to reach $3,300 an ounce by the end of this year. Analysts at Société Générale even see the possibility of gold reaching $4,000 an ounce if geopolitical tensions escalate.
Analysts’ bullishness on gold is generally based on growing uncertainty about the US economy. Bank of America believes that Trump’s ‘America First’ policy could turn into an ‘America Alone’ policy. Analysts say this shift in global rhetoric will encourage more central banks to buy gold and diversify away from the dollar.
Société Générale has made adjustments to its multi-asset portfolio and is rotating out of U.S. assets in favour of European equities. The bank has reduced its dollar holdings, increased its yen and euro holdings and stabilised gold at 7% of its portfolio.
Analysts point out that gold remains the investment of choice against the backdrop of the US government redefining geopolitics and triggering major policy responses.
Actually, it’s not just gold, silver has also attracted a lot of attention recently, with the spot silver price standing firm at $34 per ounce by the close of trading on Friday (28 March), with investors next targeting $35 or higher.
Peter Krauth, author of the best-selling book The Great Silver Bull, noted this week that silver is currently the only major metal that has yet to break above its 1980 all-time high, but that could change soon. He expects the price of silver could rise to $40 an ounce later this year, rising to $50 next year.
