During the Asian session on Tuesday, spot gold broke through the key $3,000 mark again, hitting a record high of $3,028. As a traditional safe-haven asset, global trade tensions have intensified since Trump took office in January and strong safe-haven buying has prompted gold prices to hit record highs 14 times, and has risen by more than 15.19% this year so far after a cumulative increase of 27% for the whole year of 2024. Trade concerns have intensified, and demand for safe-haven fears have soared

Tariff threats are one of the driving factors for this surge in gold prices. The turbulent U.S. trade has made gold a favored asset for investors in geopolitical and economic turmoil.

Since this year, the United States has successively imposed tariffs on major trading partners such as Mexico and Canada, and imposed a 25% tariff on all steel and aluminum imported to the United States. The United States' "tariff stick" has attracted a fierce rebound in global trade. The European Commission said on the 12th that a "hard strike back" has become the only "good medicine", and tariffs on US goods worth 26 billion euros will be imposed starting next month. Canada counterattacked more quickly, saying it would impose retaliatory tariffs on US goods worth $29.8 billion from March 13.

There is no winner in the trade war, and the global economy is the first to bear the blame, increasing vulnerability and increasingly bleak economic prospects. Global stock markets plummeted, and market participants turned to seek safe-haven assets, so gold became the first choice for capital inflows. At the same time, Trump uses the tariff threat as a bargaining chip, and his capricious actions and remarks are constantly eroding global market confidence. The market is not afraid of bad news, but hates uncertainty. Since the beginning of this year, the rising trend of gold prices has been highly consistent with the time point when trade conflicts intensify, highlighting the direct driving effect of tariff uncertainty on gold prices.

The weakening momentum of US economic growth also gives gold an upward action energy. Data released by the U.S. Department of Commerce on Monday showed that retail sales in February were far inferior to expectations, adding to consumers' signals of reducing various spending, deepening market concerns about slowing consumer spending. Previous data showed that the U.S. consumer confidence index has also declined for three consecutive months. For the service industry that is crucial to the US economy, the United States announced its initial value of the service industry PMI in February of last week at 49.7, which is not only far inferior to market expectations, but also fell below the boom and bust line in one fell swoop. It is also the first time that it has shrunk since January 2023, indicating a bleaker economic outlook.

Supported by hedging and interest rate cuts, gold prices are expected to continue to rise

The US economy is facing a "triple blow" of tariffs, layoffs and consumption tightening, with confidence in enterprises, consumers and workers shaking, and the risk of recession increases. The market generally expects the Federal Reserve to implement multiple interest rate cuts in 2025 to stimulate economic growth. Judging from the latest forecast of FedWatch, the next rate cut will be advanced to June. Expectations of liquidity easing and the downward trend of the US dollar index will support the strengthening of gold prices.

In addition, since the Russian-Ukrainian conflict, the West has frozen Russian central bank assets, and central banks of various countries have begun to deliberately stay away from US dollar reserves and turn their attention to gold. The demand for gold purchases from the central bank has continued to grow, exceeding the thousand-ton mark for three consecutive years.

All signs indicate that the gold market is ushering in a new cycle dominated by risk premiums. Many institutions in the market generally expect that strong buying power may drive gold prices to continue to rise in the medium and long term.

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