The latest tariff declaration by US President Trump has sparked another wave of gold rush. On Monday, February 10th, the price of gold as a safe-haven metal broke through $2900 per ounce, approaching the milestone of $3000.
According to Reuters, on Monday, spot gold prices climbed to a record level of $2,911.30 per ounce, marking the seventh record high so far in 2025. Gold prices have risen nearly 11% year-to-date, following a 27% increase in 2024.
Trump stated on Sunday that a new tariff of 25% will be imposed on all steel and aluminum imports into the US. He also added that equivalent tariffs will be announced, applying to all countries and matching the tariff rates imposed by each country.
Independent analyst Ross Norman stated, “Gold is clearly approaching the $3000 level, the market is very strong, almost unstoppable. The only question now is when it will reach this level, not if it will.”
“People should expect profit-taking to lead to a pullback, but we have not seen it yet, reflecting a very strong underlying momentum,” he added.
Tariffs could potentially trigger a trade war, increasing demand for safe-haven assets like gold, traditionally seen as a hedge against inflation and geopolitical instability.
The main contract trading price of US gold futures is higher than the spot price, currently at a premium of about $28.
Sources told Reuters that with the increased shipment of gold to the US, participants in the London gold market are eagerly borrowing gold from the Bank of England reserves.
Daniel Hynes, senior commodity strategist at ANZ Bank, mentioned, “Gold trading prices in the Bank of England vault are lower than the market, resulting in people waiting in line for gold for up to a week.”
Global precious metal banks are airlifting gold to the US from trading centers targeting Asian consumers like Dubai and Hong Kong to take advantage of exceptionally high premiums.
The New York Mercantile Exchange (COMEX) approved gold inventories in warehouses at 34.6 million ounces, a growth of over 90% since late November last year, reaching the highest level since June 2022.
The London Bullion Market Association reported last Friday that due to a large amount of gold being shipped to the US, the amount of gold stored in London in January decreased by 1.7% month-on-month to 8,535 metric tons, valued at $771.6 billion.
Analysts and traders pointed out that central bank demand for gold will remain strong in 2025, further driving up prices.
In a quarterly report, the World Gold Council (WGC) stated that central banks across countries purchased over 1,000 tons of gold for the third consecutive year in 2024.
Based on reported and unreported purchase data in the report, the WGC estimated that in the final quarter of 2024, central bank purchases increased by 54% year-on-year, reaching 333 tons.
Official data from the Chinese Communist Party shows that its central bank increased its gold reserves for the third consecutive month in January.
Han Tan, Chief Market Analyst at Exinity Group, said, “With the People’s Bank of China (PBOC) resuming gold purchases in January, and China’s decision to allow insurance funds to invest in gold, these actions also appear to strengthen the bullish momentum for gold.”