Gold updates all-time high amid trade wars and weakening dollar
21 April 10:37
on April 21, 2025, gold prices reached a new record high, exceeding $3,373.70 per ounce. This is reported by "Komersant Ukrainian" with reference to Reuters.
The growth is driven by growing fears of a global economic downturn caused by the ongoing trade war between the US and China, as well as the weakening US dollar. Investors are seeking safe assets, and gold is once again confirming its status as a safe haven.
Factors behind the rise in gold prices
1) Trade tensions between the US and China
US President Donald Trump announced the imposition of “reciprocal tariffs” on dozens of countries, including China, which has increased tensions in international trade. China, in turn, has warned other countries that it is unacceptable to conclude agreements with the United States to the detriment of Beijing’s interests.
2) Weakening of the US dollar
The dollar index fell to a three-year low, making gold more attractive to investors using other currencies. The decline in confidence in the dollar is due to concerns about the Trump administration’s interference in the Federal Reserve’s (Fed) policy.
3) Political pressure on the Fed
President Trump has criticized Fed Chairman Jerome Powell and is considering firing him. This raises concerns about the independence of the central bank and increases instability in financial markets.
4) Demand from central banks
Central banks, including the People’s Bank of China, continue to increase their gold reserves, which supports high demand for the metal. In the first quarter of 2025, inflows into gold ETFs totaled 226.5 tons, the highest since early 2022.
Technical analysis and forecasts
The Relative Strength Index (RSI) for gold has reached 75, indicating that the asset is overbought. However, analysts believe that in the short term, prices may rise further to $3,500 per ounce.
Market and investor reaction
Stock markets in the US and Asia showed a decline amid rising trade tensions and concerns about the Fed’s policy intervention. Investors are reducing their investments in stocks and the dollar, preferring safe assets such as gold and bonds.
According to a survey by Bank of America, 42% of fund managers prefer gold, the highest figure in recent years. This indicates a growing interest in the metal as a hedge against inflation and economic instability.
In turn, analysts at Goldman Sachs and UBS have raised their forecasts for gold prices, expecting them to reach $3,650-$3,950 per ounce in the event of increased recessionary risks. Some experts do not rule out a price increase to $4,500 in the event of a further deterioration in the economic situation.
Thus, gold continues to strengthen its position amid global economic uncertainty, trade conflicts and weakening confidence in traditional financial instruments. Investors view the metal as a reliable asset for preserving capital in the face of increased market volatility.
