Gold prices hit fresh record highs: what's fuelling the surge?

Gold prices held steady on Friday, maintaining their record high achieved during the previous session's surge. 

This surge was fueled by uncertainty surrounding potential US tariffs, which has prompted investors to seek the safe haven of gold. 

Market participants are now eagerly awaiting the release of a crucial US inflation report, which could provide further clues about the Federal Reserve's monetary policy trajectory and, consequently, influence gold prices. 

The anticipation surrounding this report has led to a cautious sentiment among investors, as they weigh the potential impact of rising inflation on the gold market.

At the time of writing, the February gold contract on COMEX was at $2,824.9 per ounce, largely flat from the previous close. The contract had hit a record high of $2,836.8 per ounce earlier on Friday. 

Ahead of the new year, many analysts had forecast that gold prices would hit record highs in the latter half of 2025. However, prices have climbed sharply since the start of the year. 

US tariff threats spur safe-haven demand

The recent escalation in protectionist US trade policies under President Donald Trump's administration has injected significant uncertainty and volatility into global financial markets. 

This policy shift, characterized by a retreat from multilateral trade agreements and a focus on bilateral deals perceived to be more favourable to the US, has led to a series of trade disputes with major trading partners.

Dhwani Mehta, analyst at FXstreet, said in a report:

Trump’s threat of steep tariffs on a broad range of imports from BRICS nations—Brazil, Russia, India, China, and South Africa—has particularly heightened concerns over the potential for a full-blown trade war and its consequent economic repercussions. 

President Trump on Thursday reiterated his warning to BRICS nations against efforts to replace the US dollar as the global reserve currency.

He reinforced his earlier threat of imposing 100% tariffs, a stance he had first signalled weeks after securing victory in the November presidential elections.

In addition to the BRICS tariffs, President Trump has also reiterated his commitment to implementing a 25% tariff on all imports from Canada and Mexico starting February 1, unless these countries agree to concessions in ongoing trade negotiations. 

This move, which targets two of the US’ largest trading partners, has further fueled uncertainty and raised fears of a regional economic slowdown.

Trump also indicated that he still plans to impose new tariffs on China, reiterating an earlier proposal of a 10% tariff but without providing specifics.

“With China, I'm also thinking about something because they're sending fentanyl into our country, and because of that, they're causing us hundreds of thousands of deaths," Trump said on Thursday.

This flight to safety has been reflected in a surge in gold prices, as investors seek to hedge against the potential risks associated with escalating trade tensions.

Gold's allure as a safe haven is currently outweighing the potential impact of higher interest rates, Ricardo Evangelista, market analyst at ActivTrades was quoted by Kitco.

“Despite Jerome Powell’s remarks suggesting that rates may remain higher for longer due to persistent inflationary risks and a robust labor market, the reaction in US Treasury yields was muted, as investors remained concerned about the potential fallout from the new administration’s protectionist policies,” he told Kitco. 

Gold price: technical analysis

According to Mehta, gold prices need to sustain above the $2,800 per ounce level, and target the next upside resistance at $2,850 per ounce. 

“Gold price stands tall near fresh record highs after closing Thursday well beyond the symmetrical triangle target of $2,785 or the previous all-time high of $2,790,” Mehta said. 

The current Relative Strength Index (RSI) of 68 suggests that the Gold price has room to increase before entering the overbought range at 70, she said. 

“On the downside, the immediate support will be seen at the previous day’s low of $2,754.”

The 21-day SMA at $2,714 will be the next target for sellers if this week's low of $2,731 is breached.