Gold prices soar to all-time high over trade war concerns – The Economic Times
Gold prices surged to a historic high on February 4, 2025, as the US-China trade war intensified, sending shockwaves through global markets. The rising demand for safe-haven assets like gold comes after former President Donald Trump imposed aggressive tariffs on Chinese imports, igniting fears of prolonged economic instability.
Investors rushed to secure their wealth, driving spot gold up by 0.8% to $2,818.99 per ounce, with futures hitting $2,857.10. At one point, prices briefly touched $2,830.49, marking a new record.
Why Are Gold Prices Rising in 2025?
Several factors are fueling this gold price surge:
- US tariffs of 25% on Chinese goods have deepened trade tensions.
- China retaliated with new tariffs on coal, LNG, and crude oil.
- The strong U.S. dollar typically limits gold gains, but investors are overlooking it due to global uncertainty.
- Rising inflation fears are driving more investors to gold.
Gold is seen as a hedge against inflation and geopolitical risks, which explains the increased flow of capital into the precious metal.
China Hits Back with Tariffs and Export Controls
China responded swiftly to Washington’s latest round of tariffs. Its countermeasures include:
- 15% tariffs on U.S. coal and liquefied natural gas (LNG)
- 10% tariffs on crude oil, farm equipment, and vehicles
- Export restrictions on rare earth metals crucial for tech and defense sectors
These moves, effective February 10, have added more pressure to already strained global supply chains.
China also launched a probe into Google for alleged market dominance and placed two major U.S. companies on its “unreliable entity list.” The economic chess match continues with no resolution in sight.
Gold ETFs See Record Inflows
According to ING commodity strategists Warren Patterson and Ewa Manthey:
“Gold hit a new all-time high after Trump’s tariffs pushed investors toward safe havens. Even though tariffs on Mexico and Canada were paused, the broader uncertainty supports gold prices.”
Data shows gold ETF holdings have increased by over 590,000 ounces in 2025 alone, now totaling 83.4 million ounces. Investors are betting on long-term gains as the global economy faces turbulence.
What Analysts Are Saying
- J.P. Morgan predicts short-term equity strength might slow gold’s rise but sees a bullish outlook due to trade disruptions.
- Oxford Economics downgraded China’s growth outlook and expects more tariffs.
- Analysts agree that unless diplomatic talks resume, gold prices may continue climbing.
The Bigger Picture: Global Markets on Edge
With China controlling most of the world’s rare earth supply, its export restrictions could impact:
- Renewable energy industries
- Technology manufacturing
- Defense and aerospace sectors
Trump has defended his tariff strategy by linking it to China’s role in fentanyl exports—an accusation Beijing firmly denies.
The back-and-forth tariff war signals long-term economic uncertainty, making gold the asset of choice for
Conclusion: Gold’s Bull Run May Be Just Beginning
With the US-China trade war intensifying, inflationary pressures building, and supply chains under threat, gold’s appeal as a safe-haven investment is stronger than ever.
If trade negotiations fail and retaliatory actions continue, analysts believe gold prices could hit new highs in the coming months.