The gold market is experiencing another 'fever'.

Gold prices are experiencing an unprecedented "tsunami," repeatedly breaking historical records. Experts believe that behind this surge lies the shadow of tough tariff policies from the US, turning the precious metal into a "safe haven" for global investors, but at the same time causing unpredictable consequences for the jewelry industry and the economy.

Gold bars are sold in Dublin, Ireland. Photo credit: AFP/VNA

Gold prices are fluctuating wildly.

World gold prices surpassed the important $2,900/ounce mark for the first time on February 10th and are trending upwards. The main driver of this increase is safe-haven demand, as President Trump issued threats of new tariffs, increasing concerns about the risk of a trade war and inflation. Specifically, gold prices at one point reached $2,911.30/ounce. From the beginning of 2025 to this trading session, world gold prices have increased by approximately 10%. Over the past 12 months, gold prices have increased by about 45%.

This price surge is driven by several factors, most notably gold's role as a "safe haven" amid increasing geopolitical and economic instability. US President Donald Trump's announcement of a 25% tariff on all imported steel and aluminum, along with China's retaliatory tariffs on US goods, has escalated the trade war between the world's two largest economies, further increasing investor concerns and leading them to seek refuge in gold.

Market strategist Bob Haberkorn from financial services firm RJO Futures believes that information about tariffs is the main driver of gold prices. In addition, a weakening US dollar is also supporting gold prices, making the precious metal more attractive to international investors.

Central banks are increasing their gold purchases in large quantities, viewing it as a safe investment amid political and economic instability. Newly released data shows that as of January 2025, the People's Bank of China (PBoC, the central bank) had been a net buyer of gold for the third consecutive month, despite record high gold prices. The PBoC's gold reserves increased by 0.16 million ounces. The PBoC resumed net gold purchases in November 2024, after a six-month hiatus. Prior to that, the bank had been a net buyer of gold for 18 consecutive months.

According to the latest annual report from the World Gold Council (WGC), gold prices set 40 new records in 2024, as global gold demand peaked at a historic 4,974 tonnes. This trend is expected to continue into 2025.

According to Phillip Streible, chief strategist at commodity futures trading firm Blue Line Futures, the sustained upward trend in gold since December 2024 could create a new ripple effect, pushing prices to higher levels. He predicts gold prices could reach $3,250-$3,500 per ounce in the near future.

Many new concerns

However, the rising price of gold is having mixed effects on the jewelry industry, especially in major gold trading centers like Hatton Garden (London).

Naqash Anjum, owner of the jewelry store Touch of Gold, shared that many pieces of jewelry that were once affordable have now become prohibitively expensive, leading to a decline in sales. The number of people wanting to sell gold is now greater than the number of buyers, impacting jewelry sales, especially during holidays like Valentine's Day.

According to the WGC, global jewelry demand fell by 11% in 2024, even though total spending on the precious metal still increased by 9%, reflecting the rise in gold prices.

President Trump's tariff policy not only impacted the jewelry industry but also triggered a wave of gold shifting from the UK to the US.

Concerns about a potential drop in US supply if Trump's broad tariffs make importing gold more expensive have led to higher gold prices in the US compared to other regions.

The Bank of England (BoE), the world's second-largest holder of gold reserves, has seen a surge in gold withdrawals. Time slots for withdrawing gold at the BoE are fully booked, as traders are rushing to ship gold to the US to take advantage of price increases. BoE Deputy Governor Dave Ramsden stated that the BoE's gold reserves have decreased by approximately 2% since the end of 2024.

In Japan, soaring gold prices and a recovery in tourism following the COVID-19 pandemic have fueled an increase in gold smuggling. Japanese customs authorities are stepping up border controls as smuggling methods become increasingly sophisticated, such as concealing gold powder in clothing.

The outlook is difficult to predict.

While gold prices continue to reach record highs, experts are also issuing warnings about potential risks. The Hong Kong newspaper "Morning Union" suggests that the recent surge in gold prices may be due to speculation, taking advantage of Trump's inauguration and the Lunar New Year to drive prices up. Once gold prices approach or surpass $3,000 per ounce, unless there are major economic or geopolitical changes, prices could fall sharply. Ordinary investors are advised not to follow the crowd, avoiding the situation of "buying high and selling low."

Despite warnings, many experts still believe that gold prices will continue to remain high in the near future. Hong Dong Hee, senior investment strategist at Standard Chartered Bank Korea, forecasts that the upward trend in gold prices will continue in the first half of 2025, thanks to expectations of the US Federal Reserve (Fed) easing policy and demand for safe-haven assets during a second term of President Trump. In his view, investors will find gold attractive when the Fed cuts interest rates because bond and savings account yields will fall, offsetting the opportunity cost of holding this non-yielding precious metal. They may increase their gold holdings in USD, thanks to the Fed's loose monetary policy and the depreciation of the USD.

However, the gold market still harbors many uncertainties, especially the unpredictable developments in US tariff policies and the US-China trade war. Investors need to closely monitor these developments to make appropriate investment decisions.

Minh Hang/VNA (Compiled)

Source: https://baotintuc.vn/thi-truong-tien-te/thi-truong-vang-lai-len-con-sot-20250215081724644.htm