Gold futures (GC=F) rose to a fresh record on Monday as growing fears of an escalating trade war prompted investors to flock to the safe-haven asset.
Futures traded as high as $3,160 an ounce, easing back somewhat throughout the session as stocks faltered. But the yellow metal is still up more than 18% for the first quarter, on pace for its best quarterly performance since 1986.
Meanwhile, spot gold rose above $3,127 an ounce ahead of reciprocal tariffs expected to be announced by the Trump administration on Wednesday.
Read more: What Trump’s tariffs mean for the economy and your wallet
In recent months, institutional investors have been shipping elevated amounts of the precious metal to the US as they front-run the threat of levies on metals.
Data released last week suggesting sticky inflation and weak consumer sentiment in addition to a move lower in the US dollar index (DX-Y.NYB) have also supported higher commodity prices, while equities on the S&P 500 (^GSPC) and Nasdaq (^IXIC) have plummeted.
As of 3:35:26 PM EDT. Market Open.
Wall Street analysts have been upping their price target on the precious metal.
Bank of America predicts gold will reach $3,500 per ounce over the coming 18 months under the assumption that investments will increase 10% through more buying from China and central banks, along with investors purchasing physically backed ETFs.
A “confluence of factors, mostly driven by the Trump administration’s economic policy mix, have pushed investors to increase their allocations to the yellow metal,” the analysts wrote last week.
JPMorgan analysts posed the question of whether a $4,000 level is possible, given the commodity’s rapid price move over the past year. Gold went from $2,500 to $3,000 in 210 days, significantly faster than previous $500 increments, which have taken an average of 1,700 days.
JPMorgan analysts asked in a client note on Wednesday, “With each $1,000 phase taking about two-thirds less time than the previous one, and considering the law of diminishing returns alongside investors’ attraction for round numbers, could the $4,000 mark be just around the corner?”
Goldman Sachs analysts reiterated their long gold trade recommendation recently, but they recognized two potential events could serve as better entry points for investors.
“First, a Russia-Ukraine peace deal would likely trigger speculative selling,” wrote Goldman commodities strategist Lina Thomas in a note last Wednesday. However, the analysts noted the freezing of Russian central bank assets following the invasion of Ukraine established “a significant precedent that should keep central bank demand high.”
