Gold’s Bull Market Gains Momentum Amid Trade War Fears and Geopolitical Uncertainty

The global gold market is experiencing an extraordinary surge in demand, fueled by escalating geopolitical tensions, trade war fears, and central bank diversification strategies. Major financial institutions, including Citigroup and UBS, have significantly raised their gold price forecasts for 2025, citing mounting economic uncertainty and aggressive policy shifts under President Trump’s administration. Citi now expects gold prices to reach $3,000 per ounce within the next three months, revising its previous short-term target of $2,800 after gold surpassed that mark last week. The bank also increased its average 2025 forecast to $2,900 per ounce, highlighting that persistent geopolitical risks and trade conflicts are driving investors and central banks to increase their gold holdings. UBS followed suit, raising its 12-month target to $3,000, acknowledging gold’s continued appeal as a hedge against uncertainty.

A key factor underpinning this rally is the intensifying demand from central banks, particularly in emerging markets, as they seek to diversify reserves away from the U.S. dollar. Citi analysts emphasized that the strengthening dollar further incentivizes central banks to increase their gold allocations to support their own currencies. The bank also noted that while the probability of a broad 10% tariff on gold remains relatively low at 20%, uncertainty over potential trade restrictions has led to a surge in safe-haven buying. Investors are turning to both physical gold and exchange-traded funds, positioning themselves ahead of possible policy shifts that could affect global trade and financial markets. Meanwhile, the Royal Mint and other major bullion suppliers have reported record-breaking demand, with investors rushing to secure gold amid tightening supplies.

China, the world’s largest consumer of bullion, has introduced a pilot program allowing select insurance funds to invest in gold as part of their long-term asset allocation strategies. This initiative, approved by the country’s financial regulator, could significantly bolster institutional gold demand in the coming years, depending on the appetite of insurance funds. The program includes ten major insurance firms, such as China Life Insurance and New China Life Insurance, and permits investments in physical gold contracts, deferred delivery contracts, and leasing agreements through the Shanghai Gold Exchange. Analysts expect this move to have a long-term positive impact on gold prices, particularly as Chinese investors increasingly turn to gold as a store of value in uncertain economic conditions. While the total exposure of insurance companies to gold under the program is capped at 1% of total assets, even a modest increase in institutional participation could add significant support to the market.

The recent surge in gold prices has also been driven by heightened investor demand in response to fears of a deepening global trade war. The Trump administration’s aggressive tariff policies are fueling speculation about retaliatory measures from key trade partners, including China, Canada, and Mexico. This uncertainty has led to record-high premiums on physical gold in the U.S. and the UK, where supply shortages are becoming increasingly apparent. According to bullion market insiders, U.S. investors have increased their purchases of UK-minted gold and silver coins by a staggering 284% in anticipation of potential tariff-related price hikes. Josh Saul, CEO of The Pure Gold Company, noted that demand levels are reminiscent of those seen during the peak of the COVID-19 crisis, as investors scramble to secure assets that can serve as protection against escalating trade tensions and economic instability.

The knock-on effects of these developments are also being felt in retirement planning, with a record number of investors moving their pension savings (SIPPs) into physical gold bars. As volatility in equity markets grows, many investors are shifting their portfolios toward tangible assets that offer security and long-term value preservation. The prospect of further trade disruptions has only added urgency to this trend, with wealth managers in Switzerland also preparing for a potential bull market in silver, which could benefit from the same safe-haven demand driving gold prices higher.

Beyond immediate trade war concerns, broader macroeconomic factors continue to reinforce gold’s strength. The extended global rate-cutting cycle, coupled with persistent geopolitical and economic uncertainty, is providing a strong foundation for gold’s bull market. The price of gold recently hit an all-time high of $2,882 per ounce, reflecting increasing investor demand as traditional financial markets struggle to navigate an environment of heightened risk. Notably, gold has outperformed the S&P 500, rising more than 26% in 2024 alone, and has increased nearly 800% since 2000.

With the Trump administration’s policies creating fresh waves of economic uncertainty, gold’s role as a safe-haven asset has never been more pronounced. Market experts, including analysts at Goldman Sachs, are urging investors to take long positions on gold, reinforcing expectations that the rally will continue well into 2025. Tax efficiency is also playing a role in the surge of demand, particularly in the UK, where investments in gold coins can be exempt from capital gains tax. This added incentive is making gold an increasingly attractive alternative to traditional assets, especially for investors looking to maximize their tax efficiency before the April deadline.

The overarching trend is clear—gold is thriving in an environment of uncertainty. As investors and central banks continue to accumulate the metal, supply constraints are emerging, driving premiums higher and reinforcing bullish price momentum. Whether as a hedge against inflation, a safeguard against geopolitical risk, or a portfolio diversification tool, gold remains one of the most reliable assets in times of economic and political volatility. With no clear resolution to ongoing trade tensions and global economic challenges, the conditions that have propelled gold to record highs show no signs of abating. As a result, financial institutions and investors alike are preparing for what could be another landmark year for gold in 2025.