The US-China trade war has reached a boiling point, and the escalating tensions have sparked fears of a global recession. In response, investors are flocking to gold, a traditional safe-haven asset, as a hedge against market volatility. Gold prices have jumped 6.5 per cent last week, marking their best weekly performance since the COVID-19 pandemic. This surge is attributed to growing global instability following President Donald Trump’s reciprocal tariffs, which have added to market volatility and pushed investors toward gold. * Key factors driving the rise in gold prices:
- High-risk scenario: Fears of a global recession and intensifying US-China trade war
- Growing concerns over the US economy
- Reciprocal tariffs by President Donald Trump
- Fears of financial instability and rising bond yields
In a high-risk scenario, Goldman Sachs expects gold prices to reach $4,500 per ounce by the end of 2025. However, under normal conditions, the financial firm expects gold to reach $3,700 per ounce by the end of 2025.
- Under normal conditions: $3,700 per ounce
- High-risk scenario: $4,500 per ounce
Not only individual investors but also institutions and central banks are increasing their gold purchases, providing strong support to prices. Central banks, especially in emerging markets, are buying gold in large quantities to reduce their reliance on the dollar.
“The first quarter of this year witnessed the highest investment in gold-based exchange-traded funds (ETFs) since 2020,”
said a market expert. “This trend is expected to continue, driven by growing concerns over the US economy and the escalating trade war between the US and China.”
The sharp rise in gold prices comes as traditional safe-haven assets like US stocks and Treasury bonds are experiencing a sell-off. Market experts note that fears of a recession, rising bond yields, and financial instability are prompting investors to seek refuge in gold. Examples of investors seeking refuge in gold:
* Central banks buying gold in large quantities
* Individual investors investing in gold-based ETFs
* Institutional investors diversifying their portfolios with gold
As doubts over Trump’s aggressive trade policies continue to grow, experts believe investors will likely keep pouring money into gold in the months ahead.
A safe-haven asset is a type of investment that is perceived as a safe haven for investors seeking refuge from market volatility and economic uncertainty.
Gold-based ETFs are investment products that allow investors to buy and sell gold without the need to physically hold the metal. These ETFs are traded on stock exchanges and provide investors with exposure to gold prices.
