Gold Prices Reach New High Amid Dollar Weakness and Trade Tensions

Gold surged to a record high this week as persistent concerns over global trade tensions, a weakening US dollar, and political pressure on the Federal Reserve increased demand for safe-haven assets.

Spot gold climbed as high as $3,396.08 an ounce, with US gold futures rising 2% to $3,396.10. The rally was underpinned by a combination of factors, including market reactions to the ongoing US-China trade conflict, a drop in the dollar to its lowest level since late 2023, and renewed debate over the independence of the Federal Reserve.

President Donald Trump has recently intensified his criticism of the central bank and its chair, Jerome Powell, reportedly exploring the possibility of removing Powell from his post. The potential move has drawn criticism from monetary policy experts, with Chicago Fed President Austan Goolsbee warning that attempts to undermine the Fed’s independence could unsettle financial markets.

“Firing Powell not only undermines the principle of central-bank independence but risks politicizing US monetary policy in a way that markets will find unsettling,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp.

He added that any erosion in confidence in the Fed could further pressure the dollar and support inflows into gold and other safe-haven assets.

The rise in gold prices has been reinforced by steady central bank purchases and a 12-week streak of gains in bullion-backed exchange-traded funds—the longest run since 2022. Goldman Sachs has forecast that gold could reach $4,000 an ounce by mid-2026 if current trends continue.

Trade tensions have also weighed heavily on sentiment. The US administration has pursued aggressive tariff policies, prompting pushback from China, which warned countries against aligning with the US in ways that compromise Beijing’s economic interests. Analysts expect upcoming global economic data, including revised projections from the International Monetary Fund, to shed more light on the impact of these tensions.

Beyond gold, silver and platinum prices also edged higher, while palladium slipped slightly. Spot silver rose 0.3% to $32.66 an ounce, platinum gained 0.3% to $969.68, and palladium declined 0.3% to $959.43.

As markets continue to grapple with geopolitical uncertainty and currency volatility, analysts suggest that gold’s momentum could push it toward the $3,500 level, though some warn that short-term indicators point to potentially overbought conditions.

With input from Bloomberg and Reuters.