Gold prices reached their highest level in nearly a week on Thursday after President Donald Trump announced new tariffs on auto imports, escalating global trade tensions and boosting safe-haven demand for gold. U.S. gold futures increased 1.15% to $3,087.60.
Gold, a traditional hedge against uncertainty and inflation, has surged more than 15% this year, peaking on March 20. “U.S. policymaking is creating significant uncertainty, and gold, being a defensive asset, is rising in response,” said Nitesh Shah, commodities strategist at WisdomTree.
Trump's announcement on Wednesday introduced a 25% tariff on imported cars and light trucks, effective next week, as part of reciprocal tariffs targeting countries contributing to the U.S. trade deficit. Traders are now awaiting Friday's U.S. personal consumption expenditures data, the Federal Reserve’s preferred inflation gauge, for insights into future rate cuts.
Goldman Sachs raised its gold price forecast to $3,300 an ounce by the end of the year, citing stronger central bank demand and higher investments in gold-backed ETFs. Analysts Lina Thomas and Daan Struyven upgraded their 2025 price target to $3,100 an ounce and expect official sector purchases to average 70 tons per month, up from 50 tons.
The $3,300 forecast reflects increased central bank buying, particularly in the November-January period, with China expected to continue accumulating at a rapid pace.
Central banks, especially in emerging markets, have significantly boosted gold purchases since 2022, following the freezing of Russian reserves. This shift in reserve management is seen as structural.
Increased demand for hedging has led to stronger-than-expected inflows into gold-backed ETFs. Goldman’s analysts predict that if ETF holdings reach 2020 pandemic levels, prices could rise to $3,680 by year’s end.