Gold prices have hit new record highs, reaching $2,970.18 per ounce as investors seek safe-haven assets amid escalating global tensions. Several factors are driving this rally, creating what analysts are calling a perfect storm for precious metals.
Trump’s Tariff Threats Fuel Uncertainty
The market is experiencing significant volatility as President Donald Trump threatens to impose 200% tariffs on European alcohol imports, including wines and champagnes from France and other EU countries. This latest move in the growing transatlantic trade war has rattled markets, with European alcohol producers seeing sharp declines. Trump has also initiated an investigation into copper imports, potentially adding the red metal to trade protections, causing copper futures to inch lower.
Potential Russia-Ukraine Ceasefire
While overshadowed by trade tensions, there are positive developments regarding a potential ceasefire between Russia and Ukraine. President Putin has expressed openness to a U.S. proposal for a 30-day ceasefire, though he emphasized that conditions still need to be finalized for a lasting peace.
Despite this potential for geopolitical de-escalation, gold’s momentum appears unaffected as multiple other factors continue to drive investor demand for the precious metal.
Iran’s Massive Gold Stockpiling
Iran has dramatically increased its gold reserves as a hedge against economic uncertainty and U.S. sanctions. By late February, Iran had imported over 100 tonnes of gold bullion, representing a more than 300% increase compared to the previous year. Iranian Central Bank chief Mohammad Reza Farzin claims that 20% of the country’s foreign currency reserves have been converted to gold.
This strategic shift comes as Iran faces renewed pressure under Trump’s “maximum pressure” policy. The government under President Masoud Pezeshkian has accelerated gold purchases as a way to decrease dependence on the U.S. dollar and maintain assets with intrinsic value for international trade.
Rate Cut Expectations Boost Gold Appeal
February’s U.S. Consumer Price Index (CPI) increased by just 0.2%, resulting in an annual inflation rate of 2.8%, slightly below the expected 2.9% and down from January’s 3.0%. This cooling inflation has strengthened expectations for Federal Reserve interest rate cuts, with markets currently pricing in three cuts this year and the first cut expected in June/July.
Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors. The Fed is scheduled to meet on March 18-19 to decide on interest rates.
Implied interest rate cuts in the U.S. Source: Bloomberg L.P.
Central Banks Continue Aggressive Buying
Central banks globally continue to accumulate gold reserves. Poland has emerged as the largest reported net buyer in 2024 with 90 tonnes, followed by Turkey (75 tonnes) and India (73 tonnes). Poland’s central bank reserves have reached 450 tonnes, making the country’s holdings the 13th largest globally, with gold now comprising 17% of its foreign exchange reserves.
Wall Street Raises Price Targets
As gold races toward $3,000 per ounce, analysts are revising their forecasts upward:
- Macquarie Group predicts gold will reach $3,500 in the third quarter of 2025
- BNP Paribas forecasts prices above $3,100 per ounce in the second quarter
- Goldman Sachs raised their year-end projection to $3,100 per ounce
GOLD (D1 Interval)
Gold reaches a new all-time high (ATH) at $2,980 per ounce. The RSI is approaching the overbought zone, while the MACD is on the verge of a bullish crossover.
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