Gold prices have surged over the key $3,200 level for the first time every, hitting a new high on Friday as the dollar weakened and the trade war escalated, sending investors toward safe-haven assets.
In Dubai, gold rates marked record gains, with 24-carat gold rising AED7.5 to AED386.75 and 22-carat gold increasing AED6.75 to AED358. Additionally, 21-carat gold gained AED6.5 to AED343.25, while 18-carat gold edged up AED5.5 to AED294.25.
Globally, spot gold rose 1.73 percent to $3,216.2 as of 4:09 GMT. Earlier in the session, Bullion scaled an all-time high of $3,219.73, gaining over 5 percent this week. Meanwhile, U.S. gold futures climbed 1.83 percent to $3,235.80.
U.S. dollar falls as trade tensions rise
The dollar index fell 0.88 percent to 99.98. The rapid weakening of the U.S. dollar is a key driver of the surge in gold prices. Major stocks also fell after U.S. President Donald Trump increased tariffs on Chinese imports to 145 percent but hit a 90-day pause on the previously announced sweeping tariffs for dozens of countries.
“According to our Gold Return Attribution Model (GRAM), euro strength and thus U.S. dollar weakness was once again a key driver of gold’s performance, alongside an increase in geopolitical risk capturing tariff fears,” stated the World Gold Council in its latest report.
China has been retaliating against each of Trump’s tariff hikes with increases of its own, sparking fears that Beijing could push tariffs on the U.S. beyond the current 84 percent. Investors are now eyeing the $3,500 level as economic tensions and concerns persist.
In addition to the emerging trade war and tariffs, central bank demand, expectations of interest rate cuts by the Federal Reserve, geopolitical instability in the Middle East and Europe, and stronger flows into gold-backed exchange-traded funds have also fueled the rally in gold prices this year.
“Gold ETF buying continued apace in March with all regions contributing. U.S. funds led the charge with $6 billion (67t) of net inflows, followed by Europe and then Asia with approximately $1 billion each,” added the report.
Fed to cut rates in June
U.S. consumer prices fell unexpectedly in March, but inflation risks are tilted to the upside, data showed. The latest reading of the Consumer Price Index (CPI) revealed that inflation cooled to an annual rate of 2.4 percent in March. This development comes as countries, businesses, markets, and consumers face America’s most significant escalation of tariff rates in over a century.
Traders now expect the Fed to resume cutting interest rates in June and reduce them by a full percentage point by the end of 2025.
According to minutes from the Federal Reserve‘s latest meeting, policymakers largely shared the same sentiment last month, warning that the U.S. economy faced risks of higher inflation alongside slower growth, with some noting “difficult tradeoffs” may lie ahead. If higher inflation forces the Fed to keep interest rates higher, gold prices will likely be impacted since bullion thrives in a low interest rate environment.
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Other precious metals
As gold prices scaled a new high, the precious metals market saw mixed movement. Spot silver gained 0.14 percent to $31.24 an ounce, but platinum lost 0.05 percent to $937.54. In addition, palladium gained 1.14 percent to $919.03.
