【MACRO Alert】Gold prices continue to climb to new highs - driven by risk aversion and investment ent

Behind this is not only the urgent demand for safe-haven assets in the market, but also the result of the resonance of multiple factors. A gold rush is unfolding around the world.

Since 2025, the gold market has been booming, with prices hitting new highs. Spot gold prices broke through the key resistance level of $2,970/ounce during the U.S. trading session on Thursday , and gold futures broke through the $3,000/ounce threshold for the first time in history. This spectacular rise not only excited participants in the gold market, but also attracted many investors who originally paid less attention to the gold market to turn their attention to this traditional safe-haven asset.

Looking back at the gold market trend this year, its increase has exceeded 12%, continuing the strong performance in 2024. In 2024, the spot price of gold soared 27%, the largest annual increase in 14 years. The continued rise in gold prices has made its position in global asset allocation increasingly prominent, becoming an important choice for investors seeking asset preservation and appreciation in uncertain times. Behind this round of strong gold gains is the result of the combined effect of multiple complex factors, among which Trump's tariff policy and the resulting market uncertainty are undoubtedly one of the important driving forces.

The Trump administration has recently issued a series of tariff threats, imposing high tariffs on a variety of imported goods including steel and aluminum. This move has triggered a strong reaction from international trading partners.

In this context, central banks are also actively adjusting their foreign exchange reserve structure and increasing gold reserves to reduce their dependence on the US dollar. The gold buying boom of central banks in emerging economies is particularly significant. In 2022, global central banks purchased a record 1,082 tons of gold, more than twice the average annual purchase in the past 10 years. This trend will continue in 2023 and 2024, with annual purchases exceeding 1,000 tons. Analysts expect this momentum to not weaken, and trade tariffs will further strengthen the trend of emerging market central banks to de-dollarize.

In addition, the layout of institutional investors has also played a strong supporting role in gold prices. Institutional investors have shipped a large number of physical gold bars to vaults in New York. This move is not only to arrange before the implementation of tariffs, but also to take advantage of the price difference between London and New York gold to profit. The inflow of funds into gold ETFs is also increasing. Since the second half of last year, investors have rushed in to seize the opportunity of soaring gold prices.

And Moses's view is not isolated. In fact, many large banks and analysts on Wall Street generally agree with this view and predict that gold prices will soon break through the $3,000 mark. There are even more optimistic predictions that gold prices will reach higher levels in the future. There are many factors driving the rise in gold prices, among which strong buying by central banks has contributed greatly, allowing gold prices to remain strong despite the previous strengthening of the US dollar and rising stock markets - two factors that are generally regarded as negative factors for gold in history. The central bank's rush to buy gold began in emerging economies, where central banks are hoarding large amounts of gold to reduce their dependence on the US dollar.

In 2022, the freezing of Russian assets by Western countries prompted non-US allies to reduce their holdings of the US dollar, fearing that their foreign exchange reserves could be "weaponized". The use of the renminbi in global trade has increased, and at the same time, Chinese domestic exporters also want to diversify their assets through gold. These factors have jointly promoted the prosperity of the gold market. Investors can participate in the gold market in a variety of ways and share the dividends brought by the rise in gold prices. Among them, the most popular is the gold exchange-traded fund (ETF), which is a fund that invests in physical gold and its shares can be freely bought and sold on the exchange.

Another way to invest in gold is to buy shares of gold mining companies. However, gold mining stocks are more volatile than the spot price of gold. In 2024, despite a 27% surge in gold prices, the NYSE Arca Gold Mining Index rose only 11%. This is mainly due to a sharp increase in the cost of gold production. Nevertheless, analysts believe that the cost inflation that has plagued gold mining companies in the past three years is easing, which will help improve the profitability of mining companies. In the current high gold price environment, mining companies with sound operations can generate considerable profits, bringing potential investment opportunities to investors.