Gold market comment

14 March 2025

Today’s market analysis on behalf of Ahmad Assiri Research Strategist at Pepperstone

Gold, the premier hedging instrument of tariff risks, continues its surge toward record levels, with the market now eyeing a target of $3000 oz. This projection does not arise from a vacuum but is rooted in a current complex financial and geopolitical context. Recent tariff threats play a significant role in this dynamic, particularly with the White House hinting at imposing tariffs that could reach up to 200% on certain European products in the event of an escalation, in addition to anticipated tariffs at the 2nd of April on both Canada and Mexico as well as reciprocal tariffs. This increases the uncertainty surrounding both the US and global economic growth prospects, pushing investors toward gold as a reliable hedging tool. Alongside trade tensions, gold receives strong support from the weakening of the U.S. dollar, which stems from a shaking image of the US exceptionalism and growing concerns about economic growth prospects. With the dollar trading below the 104 level, gold gains further momentum making it attractive to international investors.

These factors combined create an ideal environment for gold not only to store value but also to achieve gains. Gold has achieved its best start to a year since 2017 just as the SPX enters a correction territory, and with indicators heavily suggesting the continuation of risk factors supporting a bearish trend, gold stands out as one of the best hedging instruments against escalating geopolitical risks. In such times of volatility, gold is considered a primary source of investment security, as investors turn to it seeking stability in the face of market disruptions and potential negative trade news on the global stage.

 

Zaid Barem / ymm