Gold reaches new highs again and again, not just due to the Trump bubble.

Following an astonishing 27% increase in 2024, the price of gold has risen by nearly 11% so far this year. Over the past 16 months, gold has been on an upward trend, rising 63% since its low point of $1809.50 per ounce on October 23, 2023. The price of gold has accelerated since Trump was re-elected last November, increasing by 16% since its low of $2536.71 per ounce on November 15. In Tuesday's Asian trading, spot gold climbed to a record high of $2942.70 per ounce, surpassing the previous peak of $2911.30 set on Monday, marking the eighth record high since 2025. With Trump imposing various trade tariffs and threatening to impose more tariffs, uncertainty is increasing, leading investors to turn to gold as a safe haven asset. Trump's latest tariff threat has ignited another gold rush, pushing gold to new heights as the primary safe asset and bringing the milestone price of $3000 into view. Trump said on Sunday that he will impose a 25% tariff on all steel and aluminum imported to the U.S., adding that he will announce reciprocal tariffs applicable to all countries matching the tariff rates imposed by each country. Previously, Trump imposed a 10% tariff on imports from China, the largest trading partner, and threatened to impose a 25% tariff on all imports from Canada and Mexico, as well as suggesting new tariffs on imported cars, computer chips, and drugs. Independent analyst Ross Norman said, "Gold is very clearly targeting the $3000 level, and the market is very strong. The only question now is when it will blow wide open, not if it will. Profit-taking pullbacks would normally be expected, but these have not materialized, reflecting a very strong underlying momentum." The "three pillars" supporting the surge in gold prices Over the past 20 years, the price of gold has been primarily driven by three factors, with the greatest price increases occurring when these three factors are all moving in the same direction. These three driving factors are consumer demand, central bank purchases, and investment flows. Investment flows It is widely believed that the tariff plan will trigger inflation in the U.S. and may result in a trade war, increasing demand for safe-haven assets like gold. Traditionally, gold has been seen as a hedge against inflation and geopolitical instability. Concerns over the import tariff plan are reflected in U.S. gold futures, where trading prices of major futures contracts are currently trading at a premium of about $28 above spot prices. Additionally, sources have said that as the amount of gold being shipped to the U.S. increases, participants in the London gold market are racing to borrow gold stored in major central banks in London. Daniel Hynes, Senior Commodity Strategist at ANZ Bank, said, "The price of gold trading in the Bank of England's gold vault has been lower than the overall market price. This has led to queues lining up for a week to redeem gold." Global gold banks are moving gold from trading centers targeted at Asian consumers such as Dubai and Hong Kong to the U.S. to take advantage of this unusually high premium. COMEX-certified gold stocks have grown by over 90% since the end of November, reaching levels not seen since June 2022, standing at 34.6 million ounces. The London Bullion Market Association also reported last Friday that due to the surge in gold shipments to the U.S., gold stocks in the London vaults decreased by 1.7% in January to 8535 tons, valued at $771.6 billion. Investment flows are driven by the desire for diversified investments, but are also influenced by safe-haven funds and inflation hedging. Given the unpredictable nature of this U.S. president, this unpredictability may increase volatility in gold prices this year. At this point, Trump's policy uncertainty seems to be supporting gold prices. Demand from global central banks Analysts and traders have pointed out that demand from global central banks will remain strong in 2025, further pushing prices higher. The World Gold Council (WGC) reported in a quarterly report that major central banks purchased over 1000 tons of gold for the third consecutive year in 2024. This rate is more than twice the annual average of 473 tons from 2010 to 2021, indicating that central banks are playing an increasingly important role in driving gold demand. Based on estimates of reported and unreported purchase quantities in the report, in the last quarter of 2024 when Trump won the U.S. election, purchases by major central banks increased by 54% year-on-year to 333 tons. China is the world's largest gold-consuming country. Official data shows that the Chinese central bank increased its gold holdings for the third consecutive month in January. Han Tan, Chief Market Analyst at Exinity Group, said, "With China's central bank resuming gold purchases in January and China deciding to allow insurance funds to invest in gold, these measures also seem to strengthen the bullish momentum for gold." However, since central bank purchases are driven by policy rather than market dynamics, predicting their path is difficult. Trump's often unstable and conflicting policies may encourage more countries to establish financial reserves outside of U.S. assets such as U.S. Treasury bonds, which could keep demand high in 2025. Consumer demand Another factor driving gold prices is consumer demand, which is currently less prominent compared to the above two drivers. The ongoing increase in U.S. tariffs and possible retaliatory measures by other countries could slow global economic growth, push up inflation, and tighten monetary policy. Investors' response is to buy gold, with funds flowing into exchange-traded funds (ETFs). The largest gold ETF, SPDR Gold Trust, saw its holdings surge to 27.92 million ounces on February 7, up from 27The recent low of 550,000 ounces increased by 1.3%.Data from the World Gold Council shows that in recent years, the consumption demand in China and India may be the most important "three legs" of gold, with the consumption demand of these two countries together accounting for slightly over half of global consumption demand. By 2024, China's gold consumption demand is expected to be 815.5 tons, a 10% decrease from 2023, while India's gold consumption demand is expected to be 802.8 tons, a 5% increase. The total purchasing volume of these two largest buyers is 1,618.3 tons, accounting for 53% of global total consumption demand. Although China and India continue to dominate consumption demand, their momentum has somewhat weakened in recent years, with these two countries possibly transitioning from drivers of gold prices to providing support for demand when gold prices fall. Wall Street investment banks are bullish on the future of gold. Institutions generally predict that factors such as trade tensions, geopolitical concerns, ongoing demand from central banks, and global economic growth uncertainty will continue to drive gold prices higher this year. UBS recently raised its 12-month gold price forecast to $3,000 per ounce. UBS stated in a report, "Although we acknowledge that the current spot gold price is higher than our fair value estimate, the enduring appeal of gold as a store of value and a hedge against uncertainty has once again been proven." Citigroup also adjusted its gold price expectations, raising its target price for gold within three months to $3,000 per ounce, maintaining a target price of $3,000 per ounce for 6-12 months, and raising its average price forecast for 2025 from $2,800 per ounce to $2,900 per ounce. Goldman Sachs also set a gold price target of $3,000 per ounce. Goldman Sachs believes that as uncertainty in US policies continues to rise, it may continue to drive long-term risk aversion demand from central banks and investors, bringing upside risks to the $3,000 per ounce gold price target.