On Friday, during the US trading session, the spot gold price reached $2807, hitting a new historical high. Previously, Trump issued another tariff threat, prompting investors to turn to safe-haven assets.
Trump reiterated plans to impose a 25% tariff on goods imported from Mexico and Canada, and is considering additional taxes on Chinese goods.
Nitesh Shah, a commodity strategist at WisdomTree, stated, 'As long as there is uncertainty in the market, this upward trend may continue. Much of the current uncertainty stems from whether and how tariffs will be implemented.'
In addition, Paul Williams, managing director of Solomon Global, stated in a report that the rise in gold prices to record highs is not solely influenced by the controversial policies of the president. He pointed out that global geopolitical uncertainty remains very high.
Williams said: 'The performance of gold highlights the complex interactions between global factors affecting today's economy. This is not a temporary spike, nor is it a 'Trump shock', but a reflection of the uncertain geopolitical landscape and the deep-rooted instability of the global economy. The changing world order is becoming increasingly unstable, making gold an attractive choice for hedging risks and protecting wealth.'
In addition to trade tensions and geopolitical issues, stable demand for purchases from central banks is a key factor supporting gold. Carsten Menke, an analyst at Julius Baer, said: 'We believe that central bank purchases are the strongest structural force in the gold market.'
Traders are now turning their attention to the upcoming US Personal Consumption Expenditures (PCE) price index—the Fed's preferred inflation measure. This report could provide new clues for the Fed's next policy direction. Earlier this week, Fed Chairman Powell reiterated that interest rate decisions will depend on inflation and labor market conditions.
At the same time, the US GDP data released on Thursday showed that the annualized growth rate for the fourth quarter was only 2.3%, below expectations. However, consumer spending grew at the fastest pace in nearly two years, indicating that inflation pressures may persist.
As investors adjust their positions ahead of important US economic data releases, including the PCE inflation report, personal spending, and employment cost data, US Treasury yields rose slightly on Friday.
The Federal Reserve maintained interest rates at 4.25%-4.50% during its first meeting of the year, despite political pressure for rate cuts, while still mentioning inflation risks. Powell noted that before considering adjustments, the Fed needs to see 'actual progress on inflation or weakness in the labor market.' With policy uncertainty hanging in the air, gold's status as a strong hedging tool remains unchanged.
Considering factors such as trade tensions, central bank purchases, and inflation concerns, analysts believe that gold has further upside potential. Ricardo Evangelista, a senior analyst at ActivTrades, said: 'If high inflation and slow growth occur, then the $3000 price level will become increasingly viable.'
Michele Schneider, chief strategist at MarketGauge, recently stated that if gold prices clearly break above $2800 per ounce, it would easily reach $3000.
Although gold prices have reached record highs, investor demand for gold and silver ETFs remains quite sluggish, indicating that the market still has significant potential, according to Robert Minter, head of ETF strategy at abdn.
Minter added that he expects investors to turn to gold as a safe-haven asset is only a matter of time, as the current market conditions are like 'trading in a ballroom'. You can't really see what will happen next.
However, high prices have weakened demand for physical gold, especially in India, where buyers are waiting for the results of the federal budget on February 1. While this may create short-term resistance, overall sentiment remains bullish.
Article forwarded from: Jinshi Data
