Gold Surges 20% to Record $3,430 as Trade Tensions, Weak Dollar Fuel Safe-Haven Demand

Gold prices have surged to an all-time high, breaching the $3,400 per ounce mark as global trade tensions and a weakening US dollar drive investors towards safe-haven assets. The precious metal reached a record high of $3,430.18 per ounce, marking an increase of over $700 since the beginning of 2025. This rally is fueled by a combination of geopolitical risks and economic uncertainties, with the US dollar's recent decline playing a significant role.

The US dollar's weakness was partly triggered by President Donald Trump’s comments regarding Federal Reserve Chairman Jerome Powell, which raised concerns about the central bank’s independence. Trump's criticism of Powell has led to doubts about the Fed’s ability to act independently, further fueling the gold rally. The president accused Powell of not moving fast enough to reduce interest rates, and reports indicate that Trump and his team are exploring whether they can remove Powell before the end of his term.

On the trade front, China has accused Washington of abusing tariffs and warned other countries against striking economic deals with the US at China’s expense. These escalating tensions have contributed to market uncertainty, prompting investors to seek refuge in gold. David Meger, director of metals trading at High Ridge Futures, noted, “As tariff tensions continue to move at a fevered pitch, we continue to see gold prices move to the upside as a safe haven response.”

Gold has maintained a strong upward trajectory in 2025, hitting multiple record highs along the way. Last Wednesday, it surpassed $3,300 per ounce, and its powerful momentum pushed it up by another $100 in just a few days. However, some analysts suggest caution may be warranted in the short term. According to Jim Wyckoff, senior analyst at Kitco Metals, “These much bigger daily price moves in gold are one early clue this very mature bull market run is close to climaxing and that a near-term market top may be close at hand.”

From a technical perspective, the daily Relative Strength Index (RSI) remains well above the 70 mark, indicating overbought conditions. This suggests that some consolidation or a modest pullback might occur before the next leg up. Any corrective slide is likely to find support near the $3,425-3,423 horizontal zone ahead of the $3,400 mark. More substantial support exists around $3,358-3,357, followed by $3,344.

Several key factors are supporting gold’s record-breaking performance. The weakening US dollar makes bullion more appealing for holders of other currencies, while geopolitical tensions continue to boost safe-haven demand. On the geopolitical front, Russian forces launched 96 drones and three missiles into eastern and southern Ukraine after a brief 30-hour Easter ceasefire. This escalation adds to the overall sense of global uncertainty.

Gold has also surpassed the record set in 1980 on an inflation-adjusted basis, when the precious metal traded at $850 per ounce early that year. In an April report, HSBC analyst James Steel highlighted a key difference between the current rally and previous ones: “The issues driving gold 45 years ago – most notably the Iranian Revolution and the oil crisis – were remedied relatively quickly, leading gold to decline. But the breakdown in international cooperation in the last few years has led to gold staying permanently high.”

Christopher Wong, strategist at Oversea-Chinese Banking Corp., noted: “If the Fed’s credibility is called into question, that could erode confidence in the dollar and accelerate flows into havens, including gold.” Institutional investors are also contributing to the rally. Holdings in gold-backed exchange-traded funds have risen for 12 consecutive weeks, the longest run since 2022. Central banks have been adding the metal to their reserves, underpinning robust worldwide demand.

Banks have become increasingly bullish about gold’s prospects as this year’s rally has shown remarkable strength. Goldman Sachs Group has forecast that the metal could reach $4,000 by mid-2026. As trade uncertainties persist and geopolitical risks remain elevated, gold is likely to maintain its appeal as a safe-haven asset in the near term, despite potential short-term pullbacks due to overbought conditions.