Gold prices extended their rally on Thursday, rising 1.3% to $3,122.02 per ounce as trade tensions between the United States and China intensified. The move followed the previous day’s largest single-day gain for gold since October 2023.
The shift in market sentiment came after President Trump announced a temporary 90-day reduction in duties for a number of countries, while at the same time raising tariffs on Chinese imports to 125% from 104% in response to Beijing’s 84% levy on U.S. goods. Those developments fueled safe-haven demand for bullion amid growing uncertainty around global trade relations.
Minutes from a recent Federal Reserve meeting showed near-unanimous concern among policymakers that the U.S. economy faces the twin risks of higher inflation and slower growth. Officials warned these conflicting pressures could create “difficult trade-offs” for monetary policy, a dynamic that often supports gold as investors seek protection against inflation and economic instability.
Gold has been a clear beneficiary this year, gaining more than 18% to date as investors increasingly look to metals for portfolio diversification. Market strategists point to continued upside potential: WisdomTree commodities strategist Nitesh Shah estimates prices could climb to $3,600 within a year and, under current conditions, possibly reach $4,000.
Beyond immediate geopolitical headlines, factors supporting gold include persistent inflationary pressures, central bank policy uncertainty and a cautious outlook for global growth. These elements tend to increase demand for bullion from both institutional and retail investors. In addition, any further escalation in trade tensions or fresh policy surprises that stoke economic risk could accelerate flows into safe-haven assets.
However, gold’s path is not guaranteed upward. Moves in the U.S. dollar, changes in real interest rates, and shifts in investor risk appetite remain key variables. A stronger dollar or a rapid improvement in growth expectations could weigh on prices, while sustained inflationary pressure and prolonged geopolitical friction would likely reinforce bullion’s attractiveness.
For now, traders and investors will be watching upcoming economic data, central bank commentary and developments in U.S.-China relations closely. Those signals will help determine whether gold’s recent gains evolve into a longer-term trend or prove to be a temporary response to heightened near-term uncertainty.