Gold prices hit new high as dollar dives amid trade tensions
Gold reached a record level above $3,200 per ounce on Friday. The price of the precious metal is driven by a weakening dollar and growing concerns related to the escalating trade war. The metal, considered the most expensive, gained over 5 percent during the week. What’s next?
According to data from 3:01 AM Eastern Time, the spot gold price rose by more than 1 percent, reaching $3,214.92 per ounce, following a previous record high of $3,219.84. This data indicates that precious metals continue their impressive streak, increasing nearly 21 percent since the beginning of 2025. Gold futures in the US rose by almost 2 percent, reaching a value of $3,233.80.
Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany, explains the reasons behind this trend.
He explained to Reuters that the increasing threat of recession, the sharp rise in bond yields, and the ongoing decline of the US dollar are all factors that enhance gold’s function as a safe haven during crises and a protection against inflation.
The dollar index fell to its lowest level in a decade, making gold priced in dollars cheaper for foreign buyers.
The trade war could drive up gold prices
A break in the trade war did not ease fears over the effects of Donald Trump's policy. Stock markets worldwide are still experiencing declines, and economic uncertainty has increased, further boosting the attractiveness of gold as a safe haven for investors.
Giovanni Staunovo, an analyst at UBS, predicts a further increase in gold prices.
He noted that overlooking the conflict could endanger peace, which makes today’s major aid package essential for reinforcing Ukraine’s actions on the front lines.
The increase in demand from central banks and inflows into gold-backed ETFs also supports this trend.
The outlook for monetary policy and precious metal prices
There are other reasons for the precious metal to become more expensive. Data published on Thursday showed that inflation in the US unexpectedly fell in March. The market's attention now focuses on producer price data, which will be published at 8:30 AM Eastern Time, as they may provide clues about the future path of the Federal Reserve’s monetary policy.
Experts currently predict that the Fed will resume interest rate cuts in June and likely reduce them by a full percentage point by the end of 2025. The prospect of monetary policy easing further supports the prices of precious metals.
Other precious metals also saw increases. The spot price of silver rose by 0.4 percent to $31.31 per ounce, platinum gained 0.7 percent, reaching $944.35, while palladium increased by 1.9 percent to $925.43. All these metals benefit from the overall upward trend in the commodities market.
