Gold prices rose to an all-time high of $2,859 an ounce (28.34 grams), marking a sharp increase of 37 percent over the past year.
The increase comes as investors seek safe-haven assets amid economic uncertainty, especially after the new drop in US Treasury yields and concerns about trade policies proposed by former US President Donald Trump.
Ajay Kedia, director of consultancy Kedia, stated that “gold prices reached a historic high driven by a new decline in US Treasury yields and growing concerns about potential economic risks from former US President Donald Trump’s proposals on tariffs. Investors turn to gold as a safe-haven asset amid uncertainty over future trade policies”.
Lower US bond yields have made gold more attractive to investors, as lower yields reduce the alternative cost of holding non-yielding assets such as gold. At the same time, Trump’s latest tariff proposals have raised fears of trade disruptions, pushing investors toward the safety of precious metals.
Another key factor driving gold prices higher is the expectation of lower interest rates in the United States. Trump has urged the Fed to cut interest rates, arguing that lower borrowing costs would boost economic growth. Meanwhile, easing inflationary pressures in the U.S. has fueled speculation that the Fed may soon consider cutting interest rates.
Gold is often seen as a hedge against inflation and economic instability. As global markets react to uncertain trade policies and changing monetary outlook, demand for gold continues to rise. Investors are also closely watching the Fed’s upcoming policy decisions and key economic data, which could affect the direction of gold prices in the coming months.
Gold Achieves Strong Monthly Performance amid Interest Changes
Gold is on track for its best monthly performance since March last year as sentiment remains strong and participants consider the potential impact of U.S. policy. Dollar and Gold remained strong this week as the Federal Reserve fixed interest rates and the European Central Bank cut interest rates as expected. This article summarizes the latest news and rumors affecting the major markets this week and then briefly reviews the charts of the gold and euro pairs.
The Fed kept interest rates at the current 4.25-4.5% on January 29 as expected almost broadly, stressing the importance of progress in inflation ahead of further cuts. The likelihood of another rate fixation in March increased to around 85%.
The U.S. labor market remains generally strong and there is no sign of a coming recession based on GDP or other economic indicators. Notably, the Fed’s statement removed the signal of progress towards the inflation target of 2%. This may indicate that the Fed sees the current rising inflation as part of a relatively new trend and not just a few months of extreme outcomes.
The ECB made one cut to the key refinancing rate.
which was also widely expected, to 2.9%. The next meeting on March 6 is also likely to include a cut.
Donald Trump recently confirmed plans to impose 25% tariffs on various Canadian and Mexican imports while considering 10% tariffs on Chinese goods. Markets widely expect significant new tariffs, so that’s not a big surprise in itself, but details about how much tariffs cost and the products they will affect are key. Traders are waiting for confirmed detail announcements.
Trump threatens tariffs, boosting the attractiveness of gold and Bitcoin
US President Donald Trump’s threat to impose trade tariffs on global trade has increased the attractiveness of Bitcoin and gold.
“We will demand a commitment from these seemingly hostile countries that they will not produce a new BRICS currency, nor will they support any other currency to replace the strong U.S. dollar, or they will face 100% tariffs,” Trump stated on social media platform Truth, in an attempt to dissuade BRICS countries from moving away from the U.S. dollar as their reserve currency.
Price action indicated that Bitcoin had recovered somewhat from the $100K drop after the Federal Open Market Committee (FOMC) meeting on Wednesday. The US Federal Reserve acknowledged that there has been no improvement in inflation and opted to remain somewhat hawkish while keeping the federal funds rate in the range of 4.25 to 4.50 percent.
While the Fed’s monetary policy statement highlighted a strong labor market, it insisted that the risks to its twin goals are “roughly balanced.” The committee also noted the uncertainty surrounding potential future rate cuts due to ongoing policy changes in the United States.
ECB President Lagarde’s rejection of Bitcoin as a viable reserve asset for central banks highlights the difficult obstacles awaiting the adoption of Bitcoin. This illustrates how governments continue to be skeptical of Bitcoin, preventing its widespread adoption. Although some people are worried about a lengthy sell-off ahead of the next big bullish wave, derivatives market activity on the chain suggests otherwise.
Gold hits all-time high
Gold hit a record high of $2,799 an ounce early Friday, extending gains to 6.5 percent for the month. Participants in London’s bullion market were quick to borrow the yellow metal from central banks, sending gold soaring to an all-time high.
