Spot gold witnessed a substantial increase of 2.3%, reaching $3,315.62 per ounce by 1344 GMT (9:44 ET). Similarly, U.S. gold futures demonstrated strong performance, rising by 2.5% to settle at $3,324.50. The dollar index, a measure of the dollar's strength against a basket of six major currencies, saw a notable decline of 0.5%, directly contributing to gold's upward trajectory.
The resurgence of trade war anxieties followed an announcement by U.S. President Donald Trump on Sunday, revealing a proposed 100% tariff on movies produced overseas. This unexpected move ignited fears of escalating global trade tensions and the potential negative impact on the global economic landscape.
Jim Wyckoff, a senior analyst at Kitco Metals, highlighted the ongoing "flow of safe-haven demand" as a key driver behind gold's elevated prices. He further suggested that gold prices are likely to remain above the $3,000 level in the near term, underscoring the current bullish sentiment surrounding the metal.
Looking ahead, the market's attention is now firmly fixed on the U.S. Federal Reserve's upcoming policy decision later in the week. While the prevailing expectation is that the Fed will maintain its current interest rate stance within the 4.25%-4.50% range, investors will be closely scrutinizing comments from Fed Chair Jerome Powell, scheduled for Wednesday. Traders are eager for any signals regarding the central bank's future rate path, particularly in light of the growing economic uncertainties stemming from potential trade disputes.
The current meeting is widely anticipated to result in unchanged interest rates. However, analysts suggest that this might be the last such straightforward decision, as the shadow of President Trump's proposed tariffs introduces a significant element of unpredictability into the economic outlook.
Gold, traditionally viewed as a hedge against economic uncertainty and a beneficiary of low interest rate environments, has enjoyed a remarkable year, hitting multiple record highs and registering a gain of 26.3% so far in 2025.
In related news, Goldman Sachs anticipates that gold will continue to outperform silver. However, the investment bank also noted the strong correlation between the two precious metals, suggesting that renewed demand for gold in 2025 is likely to provide a boost to silver prices as well. On Friday, spot silver experienced a positive movement, rising by 1.3% to $32.39 per ounce.
Among other precious metals, platinum recorded a modest gain of 0.4% to reach $963.76, while palladium experienced a slight decline of 0.7%, settling at $947.15.