As tensions continue to mount in global markets, gold prices have surged to record highs, making it one of the most talked-about investments this year. With the stock market grappling with volatility due to President Trump’s tariff policies, investors are flocking to gold as a safer alternative. But what exactly is driving this surge in gold prices, and should you consider investing in gold during these uncertain times?
Let’s dive into why gold prices are surging, the factors behind this meteoric rise, and what you need to know before jumping on the gold bandwagon.
Gold Prices Soar Amid Market Uncertainty
If you’ve been paying attention to financial news lately, you’ve probably noticed that gold prices are hitting record highs. Just this week, gold futures reached an all-time high of $3,177 per ounce, before pulling back slightly. That’s more than an 18% increase from the start of the year—while the S&P 500, a key stock market index, has seen a 4% decline over the same period.
So why is this happening?
At the centre of this gold surge are the chaotic tariff policies implemented by President Trump. These tariffs have sent shockwaves through both global and U.S. markets, leading to uncertainty that pushes investors towards gold, often referred to as a “safe haven” investment. With fears of rising consumer prices, potential trade wars, and even a looming recession, many are turning to gold to safeguard their wealth.
How Trump’s Tariff Policies Are Impacting Gold Prices
Trump’s tariff policies have created a storm of uncertainty, and the gold market is feeling the effects. These tariffs are expected to increase the price of goods, harming consumers and businesses alike. The trade war with the United States’ biggest trading partners, including China and the European Union, is also escalating tensions around the world.
For investors, this has created a perfect storm of volatility. The stock market has been hit hard, with the most recent quarter being one of the worst in years. This has triggered a flight to assets that are perceived as more stable. Gold, as a physical commodity, is often seen as a reliable store of value during times of geopolitical or economic stress.
Michael Widmer, head of metals research at Bank of America, explains that the gold rally is largely a result of fears over Trump’s tariff policies. Widmer notes that it’s this uncertainty—about both economic policies and the potential fallout from tariffs—that is providing a boost to the gold market.
What’s Fueling the Gold Price Surge in 2025?
While gold prices have been climbing steadily for years, the recent surge since the beginning of 2025 has been remarkable. The uncertainty surrounding the trade war and Trump’s tariff actions has turbocharged the price of gold, pushing it to new heights.
Widmer even published a report last week projecting that gold could reach $3,500 per ounce in the next 18 months if these tensions continue. He attributes this rise to an increasing fear of the unknown, where global markets are unable to predict the outcomes of Trump’s economic policies.
For some investors, this makes gold the go-to option when the markets become volatile. It’s seen as a hedge against the risks posed by tariffs and the potential for a global recession.
Gold: A Safe Haven or Volatile Investment?
Despite its current rise, it’s important to remember that gold can be a volatile asset. While it may seem like a “safe bet” during times of uncertainty, its value can fluctuate, as we’ve seen in previous years.
For example, just a few days ago, gold prices briefly hit the record high of $3,177 per ounce, only to pull back slightly. This shows how quickly the gold market can change, even amidst global uncertainty.
But why is gold still considered a safe haven investment? When stock markets crash, or when interest rates are low, investors flock to gold as a tangible asset that retains value. Unlike stocks or bonds, gold doesn’t depend on company earnings or interest rates to generate returns. It has intrinsic value because it’s a finite resource.
Lee Baker, a certified financial planner and founder of Claris Financial Advisors, points out that gold typically appreciates when “it seems like the world is going to hell in a handbasket.” Essentially, when other investments seem risky, gold provides an attractive alternative.
Is Buying Gold Right for You?
As appealing as gold may seem during times of economic crisis, it’s not necessarily the right investment for everyone. Here are some things to consider before rushing out to buy gold:
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No Dividends or Interest: Unlike stocks or bonds, gold doesn’t pay dividends or interest. This means that while its value might rise, it won’t generate regular income for you. So, the only way to make money from gold is to buy it at a lower price and sell it at a higher one.
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Storage and Security: If you’re buying physical gold, you need to think about where and how you’ll store it. Gold is valuable and needs to be kept in a secure place, which can incur extra costs for insurance and storage.
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Gold-backed Funds: If owning physical gold doesn’t appeal to you, there are gold-backed funds that allow you to invest in gold without having to deal with the physical aspects. These funds are a good option for people who want exposure to the gold market without the logistical challenges.
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Market Timing: It’s tempting to buy gold when prices are high, but this could lead to disappointment if the prices drop. Timing the market is tricky, and jumping on the gold bandwagon just because prices are rising may not always yield positive results.
Diversification: The Key to a Balanced Portfolio
While gold can offer protection against economic turmoil, it’s crucial not to put all your eggs in one basket. The old investment adage “don’t put all your eggs in one basket” holds true here.
Baker emphasises the importance of diversification in your portfolio. Having a mix of assets, including stocks, bonds, and precious metals like gold, can provide more stability and reduce the risk of a major loss if one investment category drops in value.
For those looking to protect their wealth in uncertain times, gold can be an important part of a diversified investment strategy, but it should not be the only asset class in your portfolio.
Conclusion: The Future of Gold Prices Amid Economic Uncertainty
With Trump’s tariffs continuing to stir the markets, gold prices are likely to remain volatile, but they could continue to rise if the uncertainty persists. For investors looking for a hedge against economic risk, gold offers a safe haven. However, it’s essential to weigh the risks and benefits of buying gold, especially during times of heightened market speculation.
Whether or not gold is a smart investment for you depends on your overall investment strategy. As always, consider seeking advice from a financial planner to make informed decisions that align with your long-term financial goals.
Photo credit: Al Jazeera
