Gold surges to new high during volatile trading as demand spikes from Trump backers

Gold experienced a tumultuous trading period, initially soaring to a record high before retracting its gains following President Donald Trump’s announcement of tariffs on steel and aluminum imports in the US, introducing further volatility in global markets.

The precious metal reached a new high of over $2,942 an ounce, only to reverse much of its advance thereafter. Trump indicated on Monday that these new tariffs, effective in March, are intended to enhance domestic production and create more jobs in the US, while also suggesting that the tariffs “may increase.”

So far this year, gold has surged approximately 11%, consistency breaking records as Trump’s unpredictable trade and geopolitical actions solidify its status as a safe-haven asset during unstable times. Investors are keenly discerning the potential impacts of these White House policies on the US economy and monetary policy, especially since they could reignite inflation and hinder growth.

Attention will be on Federal Reserve Chair Jerome Powell’s upcoming testimony before Congress on Tuesday and Wednesday for insights concerning monetary policy. Short-term US inflation expectations have climbed above those for the longer term, reaching the widest disparity since 2023. This trend may justify a more gradual approach to easing, a situation that could be detrimental for bullion since it yields no interest.

The rise in gold prices has been matched by inflows into exchange-traded funds backed by bullion. According to a Bloomberg count, global holdings have increased in six of the last seven weeks, now standing at the highest level since November.

Several banks predict that gold could soon test the $3,000 an ounce mark. Citigroup projected last week that gold might reach this level within three months due to heightened demand from geopolitical tensions and trade conflicts. Meanwhile, J.P. Morgan Private Bank has set a year-end target of $3,150 an ounce, as noted by Global Market Strategist Yuxuan Tang.

“Until there is more clarity regarding US policies—both on trade and economic fronts—it will create an environment ripe for higher gold volatility,” commented Joseph Cavatoni, senior market strategist for North America at the producer-backed World Gold Council. “Thus, while we may observe gold prices reaching $3,000, we anticipate fluctuations that could pull prices back below that level.”

At 12:56 p.m. in Singapore, spot gold was up 0.2% at $2,915.28 per ounce after peaking at $2,942.68. Among other precious metals, silver saw losses, platinum declined, while palladium showed slight gains. The Bloomberg Dollar Spot Index remained steady after its increases on Monday.

Some market indicators suggest that bullion’s upswing could be overextended, indicating a potential pause is warranted. Gold’s 14-day relative strength index—an indicator of the speed and magnitude of price movements—approached 80, significantly above the 70 mark that some analysts consider overbought.

The rise in gold prices has positively influenced the shares of producers. In Hong Kong, Zijin Mining Group surged more than 4%, reaching its highest point since November, while Australia’s Northern Star Resources Ltd. climbed to a record high, increasing by about 20% this year.

In other developments, China’s central bank increased its gold reserves for the third consecutive month in January, demonstrating a continued effort to diversify holdings despite prices being at historic highs. Additionally, the largest economy in Asia has launched a pilot program allowing ten major insurance companies to invest as much as 1% of their assets in gold for the first time. This initiative could potentially channel 200 billion yuan ($27.4 billion) into gold, as per Minsheng Securities.

© 2025 Bloomberg

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