Gold All Time High as Tariffs Shake the Market

During 2024 the gold price increased by more than around 30% in US dollars, trading 22% higher on average in 2024 compared to during 2023; and its performance across currencies was equally strong. Gold achieved 40 record highs during 2024, with total gold demand in the third quarter exceeding US$100 billion for the first time. Investment demand, particularly through over-the-counter transactions, was bolstered by ongoing geopolitical risks and volatility in various regional financial markets.

These trends have persisted into 2025, with gold hitting a new all-time high of $2,818.99 per ounce. This surge follows President Trump’s announcement of new tariffs on select countries, which took effect today, February 4. As of now, a 25% tariff has been imposed on all imports from Canada and Mexico, alongside an additional 10% tariff on oil and gas products from Canada. A similar 10% tariff has also been placed on all goods imported from China. The White House has defended these actions as part of its broader efforts to tackle illegal immigration and drug trafficking.

The response from affected countries has been swift. Canadian Prime Minister Justin Trudeau has vowed retaliatory tariffs against the U.S., while Mexico has announced new economic measures to counteract the White House’s moves. The European Union has also issued a warning, threatening strict countermeasures if tariffs are applied to EU member states.

At present, the situation remains tense, and confidence in international markets has sharply declined. The CNN Fear and Greed Index has dropped to 41, entering the "fear" zone, signalling that concerns over a potential global trade conflict could dampen demand for financial assets. This shift has caused notable drops in major stock indices, with the S&P 500, DAX, and Nikkei all falling by over 2% in recent trading, reflecting rising fears over the new tariffs.

In this climate of heightened global uncertainty, gold has solidified its status as a key safe-haven asset. As economic instability grows, demand for the precious metal has surged, reinforcing gold’s importance as a protective asset during times of crisis.

 

Words taken from Julian Pineda, City Index.

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