Gold price breaks $3,000 per ounce barrier for the first time ever
Safe-haven demand and Trump's trade policies pushed the precious metal to record highs.
Gold prices broke the $3,000 per ounce barrier for the first time ever, driven by a massive buying spree by central banks, a weak global economy, and US President Donald Trump's attempts to rewrite the rules of global trade by imposing tariffs on allies and strategic competitors, according to Bloomberg.
Gold rose 0.4% to $3,001.20 per ounce on Friday, surpassing the psychological level of $3,000, reinforcing its historical role as a store of value in times of crisis and a benchmark for measuring market fear.
Over the past quarter century, the price of gold has increased tenfold, outperforming even the S&P 500 index of US stocks, which has quadrupled during the same period.
As traders prepared for the tariffs, gold prices in the United States jumped above other international benchmarks, prompting traders to move huge quantities of bullion to the US before the new tariffs took effect.
From the US presidential election on November 5, 2024, until March 12, more than 23 million ounces of gold, worth nearly $70 billion, flowed into the warehouses of the COMEX futures exchange in New York. These massive inflows were a major factor in pushing the US trade deficit to a record high in January.
Gold price surges are often linked to global economic and political pressures. Following the global financial crisis, prices exceeded $1,000 per ounce, while during the COVID-19 pandemic, they surpassed $2,000.
After falling to around $1,600 following the pandemic, it has rebounded since 2023, driven by central bank purchases that sought to reduce reliance on the US dollar, amid concerns about its use as a political tool.
In early 2024, the price rise accelerated with increased demand for gold in China, where concerns about a slowing economy grew. The price rally accelerated after the US elections as markets absorbed the repercussions of the US administration's new trade policies.
“Gold is the only asset that can retain value during the most severe economic turmoil we have ever seen,” said Thomas Kirtsos, Managing Partner at First Eagle Investment Management. “For centuries, despite volatility, gold has proven its ability to return to its historical average and maintain its purchasing power, while providing significant liquidity to investors.”
Gold's rise this time came despite factors that usually hinder its rise, such as rising interest rates and a strong US dollar. When bonds or bank deposits offer lucrative returns, gold, which does not generate interest, becomes less attractive. A stronger dollar also typically leads to selling pressure on the precious metal, as it is the primary currency for buying and selling gold.
However, these same factors have attracted new investors to the market. In China, the decline of the yuan against the dollar has led to an influx of investors into gold, while high global inflation rates have prompted more investors to view it as a good store of value.
“A lot of investors missed the opportunity when gold broke through $2,400, $2,500, and $2,600,” says Philip Newman, founder of Metals Focus. “We always said a correction was coming, but it never happened. I think there’s a general feeling of not wanting to miss $3,000.”
But the most significant factor in gold's rise in 2025 was the new US administration's aggressive and unexpected trade policies. US President Donald Trump imposed tariffs on imports from Canada, Mexico, and the European Union, as well as taxes on Chinese goods and all steel and aluminum imports. After the EU retaliated with counter-tariffs, Washington signaled its readiness to escalate the escalating trade war.
In addition, the US administration has alarmed markets by threatening to reshape the global order. Trump has hinted at his country's willingness to use economic coercion or even force to control Greenland and the Panama Canal, and he has also proposed a controversial plan to rebuild Gaza.
Since the surprise announcement last February of the start of negotiations with Russia regarding the future of Ukraine, the US administration has begun to reconsider the security guarantees it has provided to Europe for decades.
“The massive uncertainty created by US policy is casting a shadow over the global economy this year,” says Ian Samson, a multi-asset portfolio manager at Fidelity in Singapore.
Gold's bullish momentum was based in part on central banks' wariness of overreliance on the dollar, a reflection of rising geopolitical tensions. Since Russia's invasion of Ukraine in 2022, many central banks have noted that the United States could use the dollar as a financial weapon, prompting them to bolster their gold reserves.
Central bank gold purchases have jumped since the Russian invasion, doubling from 500 metric tons annually to more than 1,000 tons.
While buying activity in China has slowed due to rising prices, strong demand continues from countries such as Poland, India, and Turkey, which were among the largest buyers last year, according to the World Gold Council.
Despite the sharp rise, gold remains far from its all-time inflation-adjusted peak of nearly $3,800 per ounce in 1980. Back then, weak economic growth, high inflation, and geopolitical tensions pushed prices to unprecedented levels, and some analysts believe these factors will continue to push gold to break new barriers in 2025.
Gold reached the $3,000 level more quickly than most experts expected. As it surpassed the key psychological levels of $2,000 and $2,500, analysts began raising their forecasts rather than changing their views on the price trend.
“For gold to reach $3,500 per ounce, investment demand for gold would need to increase by 101%—a significant increase, but not impossible,” Bank of America analysts led by Michael Widmer wrote in a February 12 note.
