Gold Breaks New Record, Inches Closer to $3,000

A worker polishes gold bullion bars at Australia's ABC Refinery in Sydney on Aug. 5, 2020. David Gray/AFP via Getty Images

Gold prices hit new highs on Monday amid concerns about President Donald Trump’s proposed tariffs on steel and aluminum as well as reciprocal tariffs against foreign nations.

Spot gold prices hit a high of $2,905.92 per ounce on early morning trade Monday, breaking the previous high of $2,886.96 set on Friday. It was trading at around $2,898 as of 6:25 a.m. ET.

On Sunday, Trump told reporters that he planned to impose 25 percent tariffs on steel and aluminum imports into the United States. The new tariffs are to be charged over and above existing duties on the metals, White House press secretary Karoline Leavitt said.

The president said he planned to announce “reciprocal tariffs” on Feb. 11 or 12. Nations that have placed tariffs on U.S. imports could soon face tariffs on their exports to the country.

“If they are charging us 130 percent and we’re charging them nothing, it’s not going to stay that way,” Trump said.

The threat of tariffs triggered geopolitical concerns among investors, boosting the safe-haven demand for bullion.

Daniel Hynes, a senior commodity strategist at Australian bank ANZ, said, “The potential of gold also getting caught up in the tit-for-tat tariffs is causing a dislocation in the physical market.”

Kelvin Wong, OANDA’s senior market analyst for Asia Pacific, said that global trade tension is “still pretty much at play and could drive gold prices to $2,900 to $2,910 level in the near term.”

“I don’t see any high probability of a correction yet at this juncture, unless we start to see a kind of a very strong U.S. dollar push-up,” he said.

Citi revised its 0–3 month near-term target for gold to up to $3,000 per ounce from the previous forecast of $2,800.

“The gold bull market looks set to continue under Trump 2.0 with trade wars and geopolitical tensions reinforcing the reserve diversification/de-dollarization trend,” the bank stated in a note.

A Feb. 5 report from the World Gold Council revealed that total gold demand, including over-the-counter trading, hit a new record high last year of 4,974 tons.

Central banks bought the metal at an “eye-watering pace,” purchasing in excess of 1,000 tons for the third straight year. Investment demand in the bullion hit a four-year high of 1,180 tons, with gold ETFs having a “sizable impact.”

For 2025, the council forecasts that central banks and ETF investors are “likely to drive demand with economic uncertainty supporting gold’s role as a risk hedge, but on the flipside, keeping pressure on [jewelery].”

Strong Gold Delivery Demand

The demand for gold is now so high that there is a rush to take delivery of the metal at the Bank of England (BoE), one of the largest custodians of the bullion in the world, second only to the New York Federal Reserve.

BoE Deputy Governor for Markets and Banking Dave Ramsden said slots for gold are getting booked at a rapid pace.

“The US gold market has been trading at a premium to the London market and commercial gold holders have been looking to take advantage of that price differential. So, there’s been strong demand for delivery slots,” Ramsden said during a Feb. 6 press conference. “All of those bodies who ship the gold, they’ve all got the delivery slots they need over the next few weeks. If you were coming in new to us, you might have to wait a bit longer because all the existing slots are booked up.”

In a Feb. 7 update, precious metals dealer SchiffGold said that London was facing a gold shortage since major holders of the metal are transferring their bullion to the United States.

Companies in London have transferred an estimated $134 billion worth of gold to America recently, the volume of which was not minor, according to the update.

“Economists have speculated that this is due to the perception of America as ... an investment ‘safe haven.’ Specifically, the threat of major global tariffs on the horizon has foreign businessmen seeking to get their goods into America before the price of doing so becomes much more steep,” SchiffGold owner Peter Schiff said.

Reuters contributed to the report.