By Polina Devitt
LONDON (Reuters) – Gold costs have marched into uncharted territory as bulls latch on to financial uncertainty created by U.S. import tariff plans, however behind the prize of hitting a document $3,000 per ounce, some flags of a bear case are additionally being planted.
Bullion has had a storming begin to 2025, smashing eight information to rise greater than 10% by February 11. That adopted its greatest annual achieve in 14 years in 2024, on a heady mixture of sturdy central financial institution purchases, geopolitical uncertainties and financial coverage easing.
Gold’s enchantment as a haven from threat strengthened additional as newly elected U.S. President Donald Trump turned to tariffs to help struggling home trade, regardless of the chance of sparking a commerce struggle.
When Trump raised tariffs on metal and aluminium this week, spot gold hit a document $2,942.70 per ounce.
“What now we have seen is the change within the motive for safe-haven shopping for – from being pushed by the Center East uncertainty to the risk and realisation of tariffs,” mentioned Philip Newman, managing director at consultancy Metals Focus.
The size of final 12 months’s development, which began earlier than the Federal Reserve began easing rates of interest, was surprising, with buyers apparently keen to ignore the chance price of holding zero-yielding gold. The market additionally typically de-coupled from different ordinary headwinds equivalent to a stronger greenback.
“Strikingly, gold was rallying as inflation eased, and it appeared as if all of our understanding of how gold costs behaved was being challenged,” mentioned unbiased analyst Ross Norman.
Gold bulls have been emboldened by issues that U.S. tariff plans might have an effect on gold provides to the US, the place Comex gold futures commerce.
Because of this, the premium at which most-active U.S. gold futures commerce over the London spot worth – traditionally only a few {dollars} – noticed wild volatility and widened to $40 per ounce simply earlier than Trump’s inauguration on January 20 and greater than $60 throughout the inauguration week.
Market gamers sought to profit from a profitable arbitrage alternative or to cowl their current Comex positions, with the premium attracting large deliveries to Comex gold inventories. These have jumped by 18.6 million troy ounces, price $54 billion, since late November.
As bullion market gamers in London – dwelling to the world’s largest over-the-counter gold buying and selling hub – rushed to borrow gold from central banks storing bullion in Financial institution of England vaults, the ready time to load gold out of the BoE swelled.
Switzerland and Asia-focused hubs noticed a bounce in provides to the U.S., and gold lease charges surged each in London and India.