Amid global market turmoil, gold prices surged past the $3,200 mark last Friday, setting a new record. The devaluation of the dollar, escalating trade wars, and fears of an economic downturn have driven investors towards gold, a traditional safe-haven asset, pushing its price to unprecedented heights.
Spot gold rose nearly 2% on the day, reaching as high as $3,245.26, marking a historic high. U.S. gold futures closed up 2.1%, at $3,244.6, indicating strong market demand for the precious metal. For the week, gold prices climbed over 6%, recording one of the strongest weekly performances in recent years.
WisdomTree commodity strategist Nitesh Shah analyzed: "Amid the trade war clouds led by Trump, gold has become the first choice for cautious investors. With the dollar weakening and U.S. Treasury bonds being massively sold off, confidence in the U.S. as a stable trading partner has been undermined, driving funds into the gold market."
Besides macroeconomic uncertainties, several structural factors have also supported the upward trend in gold. These include continued gold purchases by central banks, the potential rate-cutting cycle by the Federal Reserve, geopolitical tensions, and increased inflows into gold ETFs, all providing support to gold prices.
U.S. economic data showed that the Producer Price Index (PPI) unexpectedly fell by 0.4% in March, reflecting a temporary relief in inflationary pressures. However, due to the import tariffs arising from trade frictions, analysts generally expect inflation to rise again in the coming months.
In terms of monetary policy, the market currently expects the Federal Reserve to restart the rate-cutting process in June, with the total annual rate cut expected to reach 90 basis points. This expectation has increased the appeal of gold and other non-yielding assets.
Apart from gold, other precious metals showed mixed performances. Spot silver rose sharply by 3.2% to $32.18 per ounce, benefiting from both safe-haven sentiment and industrial demand; palladium inched up 0.7% to $914.87; while platinum slightly fell by 0.2% to $936.36.
In summary, the strong performance of the gold market not only reflects the current rise in global risk sentiment but also reveals a growing uncertainty about the future economic trajectory. Amid global turmoil and policy battles, gold has undoubtedly become the "safe harbor" for capital once again.
