(Bloomberg) — Amidst a declining dollar and the waves of uncertainty surrounding President Donald Trump’s tariff strategies, gold has soared to a record high.
As investors adjusted to the shifting market dynamics, the price of gold jumped by as much as 1.4%, reaching $2,798.59 per ounce. This rise pushed it past its previous peak from October. A falling dollar tends to enhance the appeal of gold for those holding other currencies, as it’s priced in the US currency.
The dollar’s weakness was attributed to a rate cut by the European Central Bank, combined with data indicating the US economy grew by an inflation-adjusted annualized rate of 2.3% in the last quarter, a drop from the 3.1% growth seen in the prior period.
Following the recent US elections, gold prices have been volatile. Trump’s election win initially drove investors towards riskier assets, thanks to his pro-growth promises, causing a selloff. However, his recurring tariff threats have reignited the demand for gold as a safe haven.
Phil Streible, chief market strategist at Blue Line Futures, remarked on the uncertainties, saying, “There’s a lot at stake with Trump’s policies and tariffs, which could hamper US growth.” He added that in scenarios of rising inflation coupled with declining growth – known as stagflation – gold tends to perform exceptionally well.
“Investors seem to be gearing up for this scenario,” Streible pointed out, noting the growing interest in gold.
Trump’s economic plans are viewed by many economists as potentially inflation-inducing and a risk to growth. Federal Reserve Chair Jerome Powell mentioned that the central bank is adopting a cautious approach to assess the new administration’s impact rather than hastily adjusting interest rates.
While there’s no certainty yet, Trump has set a Saturday deadline for implementing a 25% tariff on Mexico and Canada. He also hinted at imposing broader tariffs, exceeding the 2.5% initially indicated by Treasury Secretary Scott Bessent.
These looming measures have already shaken the precious metals market. Recently, US gold and silver prices have surged past international rates, prompting traders to accelerate moving metals into the US before any tariffs kick in.
Concerns about mounting US debt also drive the gold demand, and many analysts expect this rally to persist, with central banks keen on diversifying reserves and lessening their dollar dependence.
Currently, spot gold has climbed 1.2%, priced at $2,791.79 per ounce in New York as of 12:25 p.m.
–With contributions from Sybilla Gross and Jack Ryan.
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