Six reasons gold prices keep hitting record highs

The escalation kicked into high gear in early April

By Mark Huffman of ConsumerAffairs

April 21, 2025

Key takeaways

• Geopolitical and trade tensions: The dramatic rise in gold prices is largely driven by escalating U.S.-China trade tensions, including new tariffs and retaliatory actions. Coupled with ongoing geopolitical instability (e.g., unresolved conflict in Ukraine and uncertainty around U.S. foreign policy), these factors have made gold an appealing safe-haven investment.

• Economic uncertainty: A weakening U.S. dollarnow at a three-year lowhas amplified gold’s appeal by increasing its relative value. Simultaneously, fears of a recession, stoked by the tariff policies, have led institutional investors to shift assets from stocks to gold.

• Central bank actions and Fed policy speculation: Chinas strategic tripling of gold in its reserves highlights a broader trend of central banks accumulating gold to reduce reliance on U.S. bonds. Additionally, speculation about potential political interference with the Federal Reserve has intensified market anxiety, further boosting gold demand.

The price of gold moved steadily higher throughout 2024, but in recent weeks it has surged. From approximately $2,657.60 per ounce at the beginning of 2025, the price of gold has now surpassed $3,400 an ounce.

According to economists, there are at least six factors driving the price skyward.

1. Escalating U.S.-China trade tensions

On April 2, President Trump announced steep tariffs on just about every trading partner, with the highest tariffs on China. China responded with tariffs of its own and the potential trade war made investors extremely nervous. They responded by selling stocks and bonds and buying gold, a traditional safe haven in times of uncertainty.

2. Weaker dollar

Because of growing economic uncertainty, investors have shied away from the U.S. dollar, sending its value to a three-year low. A weaker dollar makes gold more attractive, since it now takes more dollars to buy an ounce of goal a strong reason for the rising price.

3. Central bank activity

Central banks, especially China’s, have significantly increased their gold reserves over the last few months, and stepped up that activity amid this months uncertainty. China has actually tripled the share of gold in its foreign reserves to 8%. It appears to be a strategic move aimed and reducing reliance on U.S. bonds.

4. Recession fears

The U.S. Tariffs have also increased worried about an economic slowdown that could turn intoo a recession. Thats prompted many institutional investors around the world to reallocate more of their assets from equities to gold. A Bank of America survey indicates that 42% of fund managers now favor gold, up from 23% in March.

5. Geopolitical instability

President Trump had hoped to broker a peace deal by now between Russian and Ukraine, but has been frustrated. The fighting goes on. There are also growing uncertainties surrounding U.S. foreign policy. That uncertainty has also driven gold prices higher

6. Speculation aboutFederal Reserve policies

President Trumps dissatisfaction with Federal Reserve Chairman Jerome Powell spilled into public view last week, leading to speculation that Trump might try to affect changes to Fed policies and even try to fire Powell. Concerns about the Fed’s independence and future monetary policy directions have made gold look like a safe place to put your assets.

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