Gold Prices Soar to Record High as Tariff Tensions Fuel Safe-Haven Demand

By: Aditi

Published on: Apr 15, 2025

Gold prices surged to a historic peak on Monday, breaching $3,245 per ounce, as investors scrambled for safety amid escalating US-China trade tensions. The rally underscores growing fears of a global economic slowdown, driven by aggressive tariff policies and geopolitical instability.

Gold’s Meteoric Rise: A Perfect Storm of Factors

Gold futures (GC=F) briefly hit 3,245anounceduringearlytrading,surpassingFriday’srecord,beforeretreatingto3,245anounceduringearlytrading,surpassingFriday’srecord,beforeretreatingto3,244.70. Spot prices dipped 0.3% to $3,231.03, reflecting profit-taking after a 6% weekly gain.

Key Drivers Behind the Rally:

1. Tariff Escalation: Former President Donald Trump’s latest tariffs on Chinese goods—excluding consumer electronics—intensified fears of a prolonged trade war.


2. Dollar Weakness: The dollar index (DX-Y.NYB) plummeted to 99.36, its lowest since April 2022, boosting gold’s appeal as a hedge.


3. Geopolitical Risks: Retaliatory tariffs from China (84% on US imports) and Trump’s planned semiconductor duties amplified recession concerns.

Chris Weston, Head of Research at Pepperstone Group, noted, “Gold is in beast mode, feeding off dollar volatility and macroeconomic uncertainty.”

Goldman Sachs’ Bold Forecast: $3,700 by 2025

Wall Street giant Goldman Sachs (GS) revised its 2025 gold price target to **$3,700perounce\ast \ast ,upfrom$3,300—its third upward adjustment this year. In a high-risk scenario, analysts speculate prices could reach $4,500, citing:

• Recession Hedging: Rising demand for gold as a buffer against US economic downturns.


• Central Bank Buying: Aggressive acquisitions by emerging markets diversifying from the dollar.


• Inflation Concerns: Persistent inflationary pressures despite slowing GDP growth.

“Gold’s role as a crisis hedge is undeniable,” Goldman’s report stated. “Investors are prioritizing preservation over profit.”

Pound Strengthens on Tariff Exemptions; Dollar Slumps

The British pound (GBP/USD) climbed 0.5% to $1.2852, while GBP/EUR rose 0.3% to €1.1544. Markets welcomed Washington’s decision to exempt smartphones and laptops from tariffs, easing fears of a full-blown trade war.

Behind Sterling’s Rally:

• Dollar Sell-Off: The greenback’s decline followed Trump’s mixed tariff signals, including exemptions for select tech products.


• Semiconductor Tariff Plans: Trump announced upcoming duties on semiconductors but hinted at exemptions for domestic manufacturers. “We want to make chips in America,” he told reporters aboard Air Force One.

Analysts caution that despite temporary relief, the US-China trade imbalance (145% US tariffs vs. 84% Chinese duties) could destabilize supply chains and dampen global growth.

Oil Prices Edge Higher Amid Diplomatic Thaw

Brent crude (BZ=F) inched up 0.3% to $64.95abarrel,whileUSWTI(CL=F)rose0.3$61.69. Prices remain near four-year lows, pressured by:

• Demand Concerns: Fears of a recession-driven slump in energy consumption.


• OPEC+ Output: Increased production from Saudi Arabia and Russia.

Silver Lining: Reports of “constructive” US-Iran talks in Oman—the first since 2022—sparked hopes for eased sanctions and higher Iranian oil exports. Both nations agreed to reconvene, though analysts remain skeptical of a swift resolution.

Goldman Sachs forecasts Brent crude to average 63in2025,withWTIat63in2025,withWTIat59, reflecting oversupply risks and stagnant demand.

FTSE 100 Rallies 2% as Markets Digest Trade Developments

The UK’s FTSE 100 (^FTSE) jumped 2% to 8,119 points, mirroring gains in Asian and European indices. Investors balanced tariff risks with optimism around consumer tech exemptions.

Sector Highlights:

• Miners: Rio Tinto and Anglo American surged 3% on rising metal prices.


• Tech: ARM Holdings gained 4% amid semiconductor tariff reprieves.

For real-time updates, follow our [FTSE 100 Live Coverage](insert link).

Market Outlook: Volatility Ahead

Gold’s Trajectory: Short-term pullbacks are likely, but macroeconomic headwinds will sustain upward momentum. Key resistance levels hover near $3,300.
Pound’s Risks: GBP’s rally hinges on de-escalation; renewed tariffs could erase gains.
Oil’s Dilemma: Prices face pressure from OPEC+ output but may rebound if US-Iran talks progress.

Conclusion: Navigating the Safe-Haven Surge

As tariff tensions redefine global trade, gold’s rally highlights investor caution. With Goldman Sachs predicting further gains and currencies reacting to every policy shift, markets brace for a volatile 2025. Stakeholders must balance tactical trades with long-term hedging strategies to navigate uncertainty.

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FAQ
Q: Why did Goldman Sachs raise its gold forecast?
A: Escalating US-China tariffs, recession risks, and central bank demand drove the revision.

Q: How do tariffs impact oil prices?
A: Tariffs stifle economic growth, reducing energy demand. However, geopolitical developments (e.g., US-Iran talks) can offset losses.

Q: Is the dollar expected to recover?
A: Short-term weakness may persist due to trade uncertainty, but Fed rate hikes could revive the greenback later in 2025.