Gold Prices hit all time high amid Trump Tariffs
Overview
Gold prices remain stable, poised for an eighth straight weekly rise, owing to fears over US President Donald Trump’s tariff plans, which could spark trade wars and drive inflation. On Thursday, the spot gold price touched an all-time high of $2,954.69. Officials at the United States Federal Reserve are warning of increased inflation concerns as a result of Trump’s initiatives.
As of 0020 GMT, spot gold was stable at $2,934.82 per ounce. The U.S. gold futures fell 0.1% to $2,950.10, while bullion reached an all-time high of $2,954.69 on February 20, 2025. Bullion is viewed as a hedge against geopolitical dangers and inflation, but rising interest rates reduce the non-yielding asset’s appeal. Gold has increased over 12% so far this year, setting numerous records as economic and geopolitical uncertainty increase.
Trump’s Tariffs so far
Trump stated last week that he would announce new tariffs within the next month or sooner, adding lumber and forest products to already announced taxes on imported vehicles, semiconductors, and pharmaceuticals. This comes after an additional 10% fee on Chinese goods and a 25% tariff on steel and aluminum.
On the geopolitical front, Trump shifted course on Friday, stating that Russia had indeed invaded Ukraine and that Kyiv would soon sign a minerals agreement with the US as part of attempts to end the war.
Meanwhile, gold exports from Switzerland increased year on year in January as shipments to the United States reached their highest level in at least 13 years, offsetting decreased deliveries to top users China and India, according to Swiss customs statistics released on Thursday.
Demand for physical gold remains muted
Physical gold demand in China and India remained minimal last week, as buyers avoided purchases due to record-high prices. Spot silver fell 0.1% to $32.58 per ounce. Platinum rose 0.7% to $976.25, while palladium climbed 0.4% to $972.93.
Traders eye Fed Rates
Traders are eagerly watching the Federal Reserve’s interest rate trajectory for signals, as Trump’s policies are viewed as inflationary. If strong inflation causes the Fed to keep rates steady, gold’s appeal as a non-yielding asset will wane. Markets will now look to the Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, which is coming on Friday, for more confirmation of the central bank’s rate path while central banks continue to add to their gold stockpiles, while gold ETFs change from net sellers to marginal purchasers, further bolstering prices.
Gold Prices in India
Going into 2025, gold has not only reversed the price reduction witnessed in November-December (a 6% decrease), but it has also consistently achieved new highs. So far in 2025, the LBMA gold price AM in USD has increased by $286/oz, or 10%, to $2,938/oz. Domestic prices have risen in tandem with international pricing, jumping 14% to a record INR86,831/10g, with the bigger gains owing to the INR’s weakness versus the USD (1.1% depreciation y-t-d). According to the World Gold Council’s study, the rise in gold prices is due to a combination of geopolitical uncertainties, growing inflation fears, and increased investment flows.
RBI increases its gold reserves
The RBI resumed gold purchases in January, after suspending in December after 11 months of buying. The central bank added 2.8t of gold to its holdings last month, bringing its total gold reserves to a new high of 879t. This fresh buying signals that the RBI will continue to accumulate gold, following a big purchase of 72.6t in 2024, which made it the third largest buyer of gold among world central banks that year.
In addition to increasing its gold holdings, the RBI has been increasing the proportion of gold in its foreign exchange reserves, which increased from 7.7% in January 2024 to 11.31% in early February 2025. Along with a decrease in its holdings of foreign currency assets (from 88.5% to 85.2%), this increase shows the RBI’s efforts to diversify its foreign exchange reserves.
Conclusion
The prices of gold reached record levels in 2025 owing to gold prices skyrocketing due to US tariff policies, inflation concerns, and ongoing geopolitical tensions. While demand is low in vital markets, gold continues to be a strong hedge against economic risks. Gold’s influence will be affected by the Federal Reserve’s interest rate policies, while the gold price will be sustained by actions such as increasing reserves of gold at the Reserve Bank of India which point towards diversification.
The image added is for representation purposes only
