Gold prices continue to set records, experts say...

Why gold prices keep setting records

Gold prices have hit a new high in recent days, closing at $3,227 an ounce, a 22% increase since the beginning of the year. The new US tariffs have shaken financial markets, raising concerns about inflation and a global recession. Although President Donald Trump has postponed reciprocal tariffs for 90 days on most trading partners, he has increased tariffs on China to 145%, and Beijing has retaliated by raising tariffs on US goods to 125%.

UBS and Commerzbank on April 11 raised their gold price forecasts as investors rushed to seek safe havens, pushing gold prices to new records amid global economic uncertainty, largely due to US President Donald Trump's trade policies.

UBS forecasts gold prices will reach $3,500 an ounce this year, while Commerzbank also forecasts gold prices to reach $3,000 an ounce by the end of this year, higher than the $2,850 an ounce previously forecast, citing a record $345.5 billion in inflows into gold ETFs at the end of March.

World gold prices have reached an unprecedented high of 3,227.51 USD/ounce, up more than 20% since the beginning of the year.

The increase in gold purchases by central banks is also a factor pushing up gold prices.

China's gold reserves reached 73.7 million ounces at the end of March, up from 73.61 million ounces at the end of February, when the country's central bank bought gold for the fifth consecutive month.

Frank Watson, precious metals analyst at trading platform Kinesis Money, said the fact that precious metals are not subject to tariffs is a big plus. “Because gold is not considered a core industrial product, it avoids the tariff spiral,” he explained.

After gold peaked earlier this month when President Trump announced new tariffs, a wave of capital-raising selling amid a stock market crash has caused gold prices to pull back slightly.

However, by mid-week, when President Trump unexpectedly postponed tariffs on dozens of countries (except China), gold prices quickly recovered. In addition to political factors, the sharp weakening of the USD compared to other major currencies also contributed significantly to the increase in gold prices. When the greenback loses value, gold - which is priced in USD - becomes more attractive to international investors.

In addition, concerns that a global trade war will slow economic growth are leading markets to expect further interest rate cuts from the US Federal Reserve, which could put further pressure on the US dollar and reduce the appeal of US government bonds, which have traditionally been a safe haven.

“People want to have something tangible that they can hold,” said John Reade, a strategist at the World Gold Council. While not everyone has the opportunity to buy gold bars, gold jewelry remains a popular choice.

Gold does not corrode, does not lose value over time and does not require trust from the government or banking system - which makes this metal the optimal "safe" to store value in the eyes of investors.

Another factor that cannot be ignored is the gold hoarding fever from central banks. According to data from the World Gold Council, in 2024, central banks around the world bought more than 1,000 tons of gold, the third consecutive year of maintaining a record high level of purchases.

"This trend started after the outbreak of the Russia-Ukraine conflict and the West's seizure of Russia's foreign exchange reserves," said Charlie Morris, an expert at the research organization ByteTree. Since then, many countries have begun to see gold as a strategic hedge, used to stabilize currencies and as collateral for loans.

The conflict in Gaza following tensions in Ukraine also increased global geopolitical risks, a strong factor supporting investment demand for gold.

Difficult to determine fair value

Despite the parabolic rally, analysts say it is difficult to determine fair value in the current environment. "Gold typically needs to consolidate at new highs before attracting new buyers," said David Morrison, an analyst at Trade Nation. "But in a market panic, especially after the disastrous failure of the 'safe haven' US Treasurys, gold is still the destination for investors looking for safety."

Naeem Aslam, chief investment officer at Zaye Capital Markets, also predicts gold will continue to rise. “The market is overbought, even frothy, but in times of chaos, gold is the only place to go,” he said. “Fear could push gold higher before reality sets in.”

The dollar index (DXY) has fallen to a three-year low of 99, and while it could end the week at 100, many experts say the damage is already done. Jonas Goltermann, an economist at Capital Economics, said this was a turning point for the dollar as the world reacts to President Donald Trump's global tariff policies. "It's too early to predict the long-term impact, but it's fair to say that the dollar's status as a reserve currency is being called into question," he wrote.

Not only has the dollar weakened, but the 10-year US Treasury yield has surged to 4.5% – a record high – further highlighting the appeal of gold. Typically, high yields are bad for gold because they increase the opportunity cost of non-yielding assets. However, the sell-off in US Treasuries as the world questions America’s role as a reliable trading partner has led investors to turn to gold and to some extent silver.

Given the current uncertainty, it's no surprise that gold has hit a new high and could go higher, said Jerry Prior, CEO of Mount Lucas Management. "The price of gold is reflecting what we know right now. But an hour from now, the answer could be different, which shows how uncertain the market is," he said.

Jesse Colombo, an independent precious metals analyst, stressed that gold still has room to rise as the US dollar has been overvalued for years. He predicted that the commodity index would rally sharply as investors revalue the US dollar and bond yields. "In this case, the surge in bond yields is extremely positive for gold because US bonds are losing their safe-haven appeal," he said. "That forces the Fed to end quantitative tightening and start quantitative easing, which is a big boost for gold and commodities."

While President Trump has paused broad retaliatory tariffs, experts say the U.S. reputation has been damaged by the administration’s 10% tariff on imports and continued trade war with China. Sameer Samana, head of global equities at Wells Fargo, warned that while a recession is not the primary scenario, the risk is rising as tariffs drag on. Samana said a 10% increase in the cost of goods would cause consumers to spend less, slowing economic growth.

Analysts at TD Securities said the threat of a US economic slowdown is weighing on the dollar and bond yields. "The decline in the US's safe-haven appeal is linked to the loss of 'American exceptionalism'. The US growth advantage over the world has disappeared after two years," they said. "We expect the USD to weaken in 2025 as the gap between the US and the world narrows."

In this context, no one is sure how high gold prices can go. Lukman Otunuga, Chief Market Analyst at FXMT, said that the escalating US-China trade tensions, with new tariffs of up to 145% on Chinese goods, could have a negative impact on the global economy, forcing central banks to cut interest rates. "A weaker US dollar, global economic concerns and expectations of lower US interest rates could push gold higher," he said. "Technically, gold is very bullish, up 6% for the week and 23% for the year. If it holds above $3,200, gold could head towards $3,250, or even $3,300."

Alex Kuptsikevich, an expert at FxPro, is even more optimistic: "Gold is living its own life. Closing the week at an all-time high triggers an expanding bullish pattern, potentially exceeding $3,500."

Markets will continue to monitor announcements from the White House and developments in the global trade war. Fed Chairman Jerome Powell will speak at the Economic Club of Chicago on Wednesday, drawing heavy attention. Meanwhile, the Bank of Canada is expected to keep interest rates unchanged next week, while the European Central Bank (ECB) may cut rates again to support the region's economy.

Amidst the financial storm, gold remains a bright spot, asserting its role as the only remaining safe haven asset.

Source: https://baodaknong.vn/gia-vang-lien-tiep-lap-ky-luc-chuyen-gia-noi-gi-249227.html