Gold has widened its gains to 26% since the start of the year, with the safehaven metal now fetching around US$3,350 ($5,255) an ounce.
ANZ Economist Sophia Angala says gold rallied to a fresh high as the US dollar fell amid renewed concerns about a global trade war.
“US President Donald Trump launched an investigation into the need for tariffs on critical minerals,” Angala notes.
“The precious metal briefing pared gains following a report that China is open to trade talks in the US if it shows respect in reining in disparaging remarks.
“A combination of heightened uncertainty around tariffs, an anticipated slowdown in economic growth, inflation fears and increasing prospects of lower interest rates set a perfect backdrop for the precious metal to record further gains.”
US President Donald Trump reportedly overnight (AEST) announced tariffs of up to 245% on certain Chinese goods.
“Media reports note that Chinese policymakers want the US to ‘show respect’ before beginning trade talks,” Angala says.
Gold was also strengthened on the back of comments from US Federal Reserve Chairman Jerome Powell that the US economy will likely be “moving away” from the Fed’s inflation and labour market objectives “probably for the balance of this year”.
This saw US equities markets tumble overnight (AEST), but the S&P/ASX200 started the final trading session of the week in the green, lifting 10.6 points, or 0.14%, to 7,769.5 points as of 10.30am (AEST).
The index is up 0.78% over the past five trading sessions, but has lost 4.78% since the start of 2025.
Sectors were mixed, with industrials edging back 0.08% and materials inching down 0.02%, while utilities added 0.05% and energy ticked up 0.01%.
The record price is keeping the goldies notching the gains, with Bellevue Gold (ASX:BGL) advancing 5.67% to $1.03, Genesis Minerals (ASX:GMD) rising 4.33% to $4.58 and West African Resources (ASX:WAF) climbing 4.15% to $2.51.
West African, which is unhedged, produced 50,033 ounces at all-in-sustaining costs of US$1,262 an ounce during the March quarter.
The company’s unhedged gold sales for the quarter amounted to 48,338 ounces at an average price of US$2,832 an ounce. This delivered cash flow of $73 million after $20 million of income tax payments, which boosted cash on hand to $331 million and unsold gold bullion to $43 million by the end of the quarter.
Ole Hansen, Head of Commodity Strategy for Saxo Bank, says the gold price has hit the bank’s target of US$3,300 “well ahead of schedule”. This has prompted Saxo to raise its forecast for 2025 to US$3,500 an ounce.
“Gold has been on a tear since Q4 2022 when a triple bottom around US$1,620 signalled the confirmation of a solid price floor following three years of sideways action,” he says.
“It would take another year until December 2023 before technical resistance around US$2,075 was finally broken, with the trigger being heightened geopolitical tensions as the Israel-Hamas war started, adding to already strong demand from central banks seeking to diversify and de-dollarise their reserves.”
So where to from here?
“In the short to medium term, a combination of heightened global economic tensions, the risk of stagflation — a combination of lower employment, growth, and rising inflation — a weaker dollar, may, in our opinion, continue to support bullion,” Hansen says.
“Adding to this is a market that is now aggressively positioning for the Fed to deliver more cuts this year.”
More than 75 basis points of easing is anticipated by the end of the year.
Hansen says continued demand from central banks and high-net-worth individuals, especially in Asia, looking to reduce or hedge their exposure to US government bonds and the dollar will also keep gold high.
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & Unsplash
