Gold Surges 0.6% to $3,145 as Trump Tariffs Fuel Safe-Haven Demand

Gold prices continued their upward trajectory on Tuesday, surpassing the $3,100 mark for the first time on Monday. The precious metal reached a new all-time high of $3,127, and by the time of publication, it had surged past $3,145 per ounce, marking a daily increase of over 0.6%. The heightened tension among traders, stemming from President Trump's plan to announce comprehensive tariffs on all U.S. trading partners on Wednesday, has significantly contributed to gold's impressive performance this year. This surge has led to the best quarterly performance for gold since September 1986, with an increase of nearly a fifth.

The robust performance of gold is underpinned by economic and geopolitical conditions. Quasar Elizundia, a researcher, noted that gold has started the second quarter of the year with unprecedented strength, reflecting its current appeal. The primary driver behind this exceptional rally is the growing concern over escalating trade and geopolitical tensions, exacerbated by recent decisions and warnings from the U.S. President.

Amy Gower, a commodities strategist, highlighted that the surge in gold prices is supported by strong physical demand and a favorable macroeconomic environment. Recent purchases of gold bars, coins, and exchange-traded funds indicate new inflows of capital, with more expected to follow. From a macro perspective, gold's role in investment portfolios is being closely watched in relation to interest rates, stocks, and bonds. Despite a slight rise in the U.S. dollar index and Treasury yields on Monday, gold's upward momentum remained unabated.

Gower anticipates that gold prices could reach $3,300-$3,400 by the end of the year, aligning with several major banks that have revised their gold price targets upward. Goldman Sachs recently increased its year-end gold price forecast to $3,300 per ounce, predicting that under extreme market conditions, gold could surpass $4,500 within the next 12 months. The bank has also raised the probability of a U.S. economic recession to 35%, citing pessimism among businesses and households, as well as Washington's tolerance for further economic slowdown.

The uncertainty surrounding tariffs has impacted stock markets and driven a new wave of safe-haven buying in the gold market. While there are some technical resistance levels that could lead to short-term profit-taking or corrections, the overall bullish trend remains intact. The fundamental support for gold prices continues to be strong.

Technical indicators suggest that gold is currently overbought, with a relative strength index above 77. However, analysts point out that this momentum defies conventional logic given the current price levels. Without significant technical resistance, gold remains firmly in a "buy strong" and "buy weak" mode, reinforcing its robust upward trend.

There are indications that strong buying activity from China is contributing to the gold rally. Daniel Ghali, a commodities strategist, expects that the continued uncertainty surrounding Trump's trade policies will drive macro funds to purchase more gold. Ghali also noted that silver has not benefited from gold's rally, reflecting the unique strength of gold prices rather than weakness in silver.

As the announcement of retaliatory tariffs by Trump looms, investors should be mindful of the potential for a "buy the rumor, sell the fact" scenario. If the announced tariffs differ from expectations, gold could face short-term selling pressure. However, retaliatory measures from other countries and threats of global supply disruptions could reignite concerns about inflation and economic slowdown, conditions that historically drive gold prices higher.

The current gold price is significantly above the key support level of $3,063.80, with the main bottom at $2,999.46 and the 50-day moving average at $2,910.70. As long as prices remain above $3,000, the path for further gains appears clear, especially if the April 2 policy statement reinforces the inflationary backdrop. In this environment, the analyst's target of $3,500 does not seem out of reach.