Gold Hits Record Before Retracting as Trade Wars and Central Bank Rush Fuel Rally

Gold prices surged to an all-time high of $2,909 per ounce on February 7, 2025, before settling at $2,865.36, driven by escalating U.S.-China tariffs, central bank acquisitions, and mixed U.S. labor data.

The metal gained 0.3% on the day, marking its sixth consecutive weekly rise as investors sought safety amid geopolitical turbulence. President Trump’s 10% tariffs on Chinese imports and threats of reciprocal EU duties reignited trade war fears, pushing COMEX April futures to $2,887.60 (+0.38%).

China retaliated with levies on U.S. energy goods, amplifying demand for bullion as a hedge. The People’s Bank of China extended its gold-buying spree, adding 0.16 million troy ounces in January — its third straight month of purchases.

U.S. nonfarm payrolls added 170,000 jobs in January, missing December’s 256,000 and fueling bets on Federal Reserve rate cuts. Benchmark 10-year Treasury yields slid to December 2024 lows, reducing the opportunity cost of holding non-yielding bullion.

India’s gold prices climbed for a fourth day, with Delhi’s 24K rate hitting ₹86,670/10g (+₹10) amid wedding season demand. The UAE saw 24K gold rise 0.4% to AED 345.75 despite higher fuel costs, while Thai jewelry rates held at 46,200 baht.

Gold Outlook Amid Global Tensions

China’s retail demand softened at record prices, but central bank buying offset the slump. Technical analysts flagged a bullish ascending channel since mid-January, though overbought RSI levels at 72 signaled caution.

Immediate support rests at $2,834, with resistance near the psychological $2,900 mark. Citi Research raised its three-month target to $3,000, citing trade war risks and dedollarization trends.

Commerzbank warned of a mid-2025 correction to $2,700, citing “political turbulence” from Trump’s policies. ActivTrades’ Ricardo Evangelista noted tariffs “cast a shadow on global growth,” reinforcing gold’s haven appeal.

Global gold ETFs attracted $3.7 billion in July 2024 inflows, though February 2025 data remains sparse. COMEX futures volume hit 179,327 contracts, with volatility spiking post-payrolls.

Central banks purchased over 1,000 tonnes of gold for the third straight year in 2024. London vaults reported a record 4.9-million-ounce outflow in January as traders shipped metal to capitalize on U.S. premiums.

Gold’s outlook stays bullish on Fed cut expectations and trade tensions, though profit-taking near $2,900 poses short-term risks. The metal remains a cornerstone of reserve diversification as policymakers navigate an increasingly fragmented global economy.

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