Gold prices have surged 26% in 2024, slightly outpacing the S&P 500’s 25% gain, leaving investors wondering: Will the gold rush continue or is it time to take profits? And with President Donald Trump in office for a second term, things could change quickly.
Gold is in the midst of a strong rally, driven largely by safe-haven demand amid concerns over inflation, geopolitics and President Donald Trump's harsh tariff policies, experts say.
“Gold hit a record high in 2024 and we believe this trend will continue in 2025. It is an important asset to help build a sustainable investment portfolio,” said a report from J.P. Morgan bank.
The shift of foreign exchange reserves away from the US dollar by central banks - especially after the US freezes Russian assets in 2022 - has boosted demand for gold.
“We don’t see a decline in central bank demand in the near term,” said Lina Thomas, commodities strategist at Goldman Sachs. With the Fed cutting interest rates, investors are flocking back to the gold market. Ms. Thomas predicts that gold prices could reach $3,000 an ounce by the end of 2025.
On February 3, the world gold price continued to reach a new peak when President Donald Trump announced a strong tax on Canada, Mexico and China, causing investors to worry that inflation would accelerate and economic growth would be affected. However, by the end of February 3, Mr. Trump announced a one-month suspension of the tax on Canada and Mexico, while continuing to impose an additional 10% tax on Chinese goods.
Spot gold rose 0.8% to $2,818.99 an ounce, after hitting a record high of $2,830.49 an ounce earlier. US gold futures also rose to $2,857.10 an ounce.
“While a strong US dollar typically puts pressure on gold prices, trade war concerns have increased safe-haven demand,” said David Meger, director of metals trading at High Ridge Futures.
Matthew Miller, an analyst at CFRA, predicts that gold will benefit from the current situation: “Gold will perform well in a context of falling real interest rates, rising budget deficits, devaluing fiat currencies and escalating geopolitical conflicts globally.”
However, not everyone is convinced that gold will continue to rise strongly. Bart Melek, head of commodity strategy at TD Securities, said the market reaction is still unclear.
“If trade tensions persist, gold prices could rise further. But if there are signs of cooling, this trend could reverse,” Melek said.
With President Donald Trump's second term fraught with uncertainty, investors are still betting: Is gold really a solid "safe haven", or is it just a temporary wave?
