Gold is now rising to an all-time high, similar to its most recent in 1980, when political and economic instability was the main driver for gold prices to set records.
The most recent driver of gold's rally to over $3,000 an ounce has been US President Donald Trump's new tax on trading partners.
Last week, spot gold prices set a new record, reaching $3,167.57/ounce. Since the beginning of the year, gold prices have increased by 16%, after increasing by 27% in 2024. Although gold prices may fluctuate up and down, experts say that this rally - as gold enters an unprecedented price zone - is likely to last longer and more steady than the strong rally 45 years ago.
Analysts pointed out that President Donald Trump's tax stance, including Washington's largest trade barrier in more than 100 years on February 2, has prompted new investors to rush into gold, due to concerns about a full-scale trade war.
HSBC's Steel expert pointed out that the reason for the world gold price 45 years ago - most notably the Iranian Revolution and the oil crisis - has been overcome relatively quickly, causing gold prices to decrease.
But the disruption in international cooperation in recent years has caused gold prices to stay high. This makes many question whether there is a bigger geopolitical factor dominating the market," he said.
Trade tensions are only the latest in a series of factors driving world gold prices higher: The two-year COVID-19 pandemic, followed by the Russia-Ukraine conflict in 2022, the Chinese real estate market crisis and the conflict in Gaza.
The conflict in Ukraine has led to the West freezing half of Russia's foreign currency reserves, holding only gold. Therefore, central banks outside the West are turning to buying gold as they seek to diversify foreign exchange reserves away from the USD.
monetary policy easing and concerns about budget deficits also prompted the West to invest more in gold last year.
Referring to escalating trade tensions, George Griffiths - head of trading at brokerage AMT Futures - said: "Recent crises have fueled coordinated responses globally, but this time there is almost no hope for policy consensus."
World gold prices have hit records this year but there is still another milestone, according to StoneX analyst Rhona O'Connell. Accordingly, gold prices peaked at 850 USD in January 1980, equivalent to 3,486 USD today if calculated at USD prices.
Although gold prices have now hit a new record high in name, it can be argued that we have not yet reached a peak if calculated by real value, Mr. Steel commented, referring to the gold price record of the 1980s.
Experts also believe that current developments are reinforcing the forecast of a prolonged gold rally, and the real peak of gold prices will fall in 2026, not this year.
On March 26, BofA commodity strategist Michael Widmer raised his gold price forecast from $2,750 and $2,625 for 2025 and 2026 to $3,063 and $3,350, respectively. He now predicts spot gold will hit $3,500 within two years.
