Gold soars to $3,000 as Trump ramps up commerce conflict – and one knowledgeable predicts value will hit $4,500

The price of gold has topped $3,000 for the first time as US president Donald Trump’s tariff threats send investors fleeing to safe havens.

The price later retreated slightly below the new record level, but financial experts say market uncertainty will continue to support the value – and one speculated it could hit $3,500 by summer and $4,500 within the next year.

Trump’s latest comments about tit-for-tat tariffs on alcohol with the EU, plus the massive uncertainty sparked by his trade war with allies and international foes alike, are apparently driving gold buying trends at present.

The gold price started this year at around $2,600 and has hit a series of all-time highs in the past few months.

The precious metal is a store of wealth and hedge against inflation, a useful way to diversify and a safe haven asset during financial and political upsets.

But it generates no income and the price can be volatile, with many drivers that can act in concert or be in conflict, and hold weaker or more dominant sway at any one time.

> What drives the gold price and how to invest – see below

‘Gold breaching the psychologically significant $3,000 level is a direct response to escalating trade tensions and the growing economic uncertainty that this brings,’ says Paul Williams, managing director of Solomon Global, a supplier of gold and silver bars and coins.

‘Trump’s latest tariff threat, a potential 200 per cent duty on EU alcohol imports, has sent further shockwaves through global markets, fuelling demand for safe-haven assets.

‘This isn’t just a knee-jerk reaction to individual policies; it’s investors seeking protection against systemic risk.

‘Given the current momentum, gold at $3,500 by summer and $4,500 within the next year are in the realms of possibility. With the Trump tariff turmoil spooking markets once again, gold is being chosen as the ultimate shield against political and economic unpredictability.’

But John Reade, senior market strategist at the World Gold Council, says: ‘The big question now is whether gold can hold above $3,000.

‘For that to happen, we need to see continued central bank demand or a pickup in Western investment flows.’

Reade says a $3,000 price is a significant milestone and reinforces the asset’s safe haven role in uncertain times – noting that it hit $1,000 during the financial crisis, and $2,000 in the Covid-19 pandemic

He adds that strong central bank demand and growing interest from emerging market investors have been the two key forces driving the price over the past five years.

‘Adding to this longer-term trend, the recent rally has been the result of uncertainty around US tariffs, which has been amplifying economic risks and market volatility, further driving investor interest in gold as a key diversifier.’

Tom Bailey, head of research at HANetf, says: ‘Gold has once more hit a new all-time high, as investors look towards the precious metal as a hedge against risk.

‘We’ve been here before, with the price of gold breaching several new highs both this year and last year. Persistent geopolitical and economic uncertainties, particularly around tariffs, continue to support gold’s appeal as a safe-haven asset.

‘After a stellar performance in 2024, gold is showing the potential to maintain this momentum in 2025, and we expect further upside from here.

‘But there is one key difference between the rally this year and last year. European investors have joined the party.’

Bailey says European investors pulled $5.8billion out of gold-backed exchange-traded commodities in 2024, but this year has seen a dramatic reversal.

He adds: ‘While gold miners have lagged the gold price recently, they may present an opportunity for stronger performance as they catch up with the rally in the underlying metal.’

How to invest in gold

Exchange Traded Commodities (ETCs): This is similar to holding a index tracker fund, only for the gold price.

You need to check whether an ETC has exposure through derivatives rather than physically owning the precious metal, as these can be complicated.

Multi-asset or specialist funds: You can find some tips here. 

Physical bars or coins: If you keep them at home you will need to ensure you have security and insurance cover. Many firms will hold them in a secure vault for you.

Mining stocks: These can be volatile so less experienced investors may prefer a fund whose manager specialises in this sector.

What drives the gold price

The current consensus among investing experts is uncertainty generated by Donald Trump is driving purchases of gold as a safe haven asset right now.

But the price can end up in a tug of war between opposing forces, which investors should be aware of and keep an eye on. The following factors or others can be influential.

Physical gold purchases: Demand for coins, bars and jewellery, which can be seasonal. For example, the festival of Diwali is a popular time to buy gold jewellery in India, and so is the Lunar New Year in China for all types of physical gold.

Expectations of inflation and future interest rate decisions: Moves by the world’s most powerful central bank, the US Federal Reserve, are the most important.

Rate cuts, or merely anticipation of them, make gold more attractive to investors as they weaken the dollar and can fuel inflation.

A strong market consensus on what a determined Fed is going to do next can trump a number of opposing drivers of the gold price combined.

Central bank purchases: Many like to hold gold and have deep pockets, though some are believed to conduct their operations under the radar

Mystery buyers: In recent years, there has been much speculation that covert trading activity has influenced the gold price.

The main suspects are the Chinese or the Russian central bank, or maybe both.

The invasion of Ukraine led to sanctions against Russia, which has the world’s second largest gold mining industry.

Meanwhile, there is conjecture that China is under-reporting its central bank gold reserves, possibly because it is building a warchest against Western sanctions should it invade Taiwan.

The US can prevent sanctioned countries clearing dollars through its financial system.

Less powerful countries than China or Russia might also be inclined to build gold reserves on the quiet to bolster their financial position should they get on the wrong side of Washington and the West.

The US dollar: A strong dollar makes gold more expensive and this can deter all types of buyers and weigh on the price.

This is because it is denominated in the US currency, so when the dollar is strong it can price out overseas buyers. Conversely, a weaker dollar may help boost the gold price.

Geopolitical events and crises: Gold is considered a safe haven in times of trouble. However, so is the dollar, which can also strengthen during periods of turmoil, so these two trading trends sometimes work against each other.

Institutional investor and hedge fund plays: Even when demand for physical gold is strong, it can be offset by volatility in ‘paper gold’, in the form of exchange-traded funds held by institutional players like banks and hedge funds.