Economic Uncertainty and Trade Policies Fuel Investor Interest in Precious Metals

Weekly Gold Price Movement

As of February 18, 2025, gold prices have experienced a modest increase compared to last week. On February 11, 2025, gold was priced at $2,897.85 per ounce, while today it stands at $2,925.26 per ounce, reflecting a rise of approximately 0.95%. This increase highlights continued investor interest in gold as a hedge against economic uncertainty and inflationary pressures.

Key Factors Influencing Gold Prices

One of the most significant drivers of gold’s recent rally was President Donald Trump’s announcement of new tariffs. On February 1, 2025, the administration imposed a 25% tariff on imports from Mexico and Canada and a 10% tariff on imports from China. However, on February 3, 2025, the White House announced a 30-day pause on tariffs for Canada and Mexico, citing ongoing negotiations over border security and trade enforcement.

Uncertainty surrounding U.S. President Donald Trump's recent tariff strategies has heightened demand for gold as a safe-haven asset. Implementing a 10% tariff on Chinese imports, coupled with planned 25% tariffs on goods from Mexico, Canada, and imported steel and aluminum, has sparked concerns about a potential global trade war. Many analysts fear these trade policies could slow economic growth and increase inflation, driving investors toward gold as a reliable store of value.

Financial institutions have responded to these developments by adjusting their gold price forecasts. Goldman Sachs has raised its year-end gold price target to $3,100 per ounce, with the potential to reach $3,300 if trade uncertainties persist. Similarly, UBS analysts project that gold could climb as high as $3,200 per ounce before stabilizing. Meanwhile, JP Morgan has also revised its outlook, citing expectations for increased central bank gold purchases amid currency fluctuations and potential interest rate cuts.

Potential Market Moving Events

The next few weeks will be crucial in determining how gold prices move. The following events could significantly impact the precious metals market:

- Federal Reserve Meeting Minutes Release (February 19, 2025): Investors will closely analyze the Fed's stance on inflation, interest rates, and economic risks stemming from trade disputes. A dovish tone from the Fed could further support gold prices.

- President Trump's Address (February 20, 2025): If new trade policies or additional tariffs are announced, market volatility could rise, further strengthening gold's appeal.

- G20 Summit (February 25-26, 2025): Global leaders will discuss trade and economic policies, potentially influencing international market stability and investor confidence. Any signs of diplomatic resolutions or escalating tensions could shift gold prices.

The recent rise in gold prices underscores the metal's role as a hedge against economic uncertainty, particularly in light of evolving trade policies and potential inflationary pressures. With ongoing tariff disputes and global economic shifts, gold is expected to remain a key focus for investors looking to preserve their wealth in an unpredictable market. Keeping an eye on upcoming economic and political events will be essential in navigating the precious metals landscape.