Gold prices continued to set fresh record highs on Tuesday as flaring tensions in the Middle East and worries about tariffs sent investors diving for cover. Spot gold rallied to $3,028.52, setting a new all-time high as the US dollar weakened further, and extending its rapid ascent after hitting $3,000 an ounce for the first time on March 13th.
There are multiple drivers for gold, ranging from general trends like macroeconomic uncertainty and geopolitical tension to more specific drivers like expected Fed policy rates, inflation expectations, tariffs, central bank buying and liquidity issues in the London market.
Trump’s Tariffs and Middle East Tensions Lift Gold
Donald Trump’s tariffs are having a couple of effects. One is the sheer amount of uncertainty over the economic impact on the U.S., which is leading investors to find some safe haven. But tariffs are also feeding an inflation narrative and expectations for central bank policy to cut rates this year, which has created dynamics that favor gold. Rising actual and expected inflation in the U.S., combined with lower expected policy rates as the Federal Reserve contends with slowing growth due to government cuts and tariffs has pressured real yields, which is a trend supportive of gold. This shift has also hit the U.S. dollar, previously riding high, which makes gold cheaper for foreign buyers since it’s priced in USD.
“Investors continue to rotate away from the US dollar and find perceived safe havens amidst the heightened policy uncertainty,” said analysts at Deutsche Bank.
Further uncertainty in the Middle East was stoked after Israel launched strikes on Gaza overnight, with Netanyahu’s office saying that “Israel will, from now on, act against Hamas with increasing military strength.” Meanwhile, U.S. threats on Iran and strikes against Houthis in Yemen is also raising the Middle East heat.
Tariff jitters haven’t gone away, either. White House economic adviser Kevin Hassett added to the uncertainty, saying we’re likely to see more noise ahead of the administration’s planned announcement on “reciprocal” tariffs in early April.
Meanwhile, worries about import tariffs has tightened liquidity in the London spot market, leading to a widening of the spread between Comex futures prices in New York and the London spot price. This has made gold prices rise faster recently than they might have done otherwise.
Gold Races Ahead
The rally in gold has left many in its wake and analysts have scrambled to keep pace with the rise in prices. Gold has rallied 14% in 2025 and made 14 record highs since Donald Trump’s inauguration. The SPDR Gold Trust (GLD), the world’s largest ETF holding physical bullion, has tracked this move higher as equity markets in the U.S. have plunged.
UBS upped its price target on gold yesterday to $3,200, while a month ago Goldman Sachs raised its gold price target to $3,100, with a potential rally to $3,300 if policy uncertainty remains high.
Today, ANZ raised its 3-month gold price forecast to $3,100 and 6-month forecast to $3,200. “We maintain our bullish view, amid strong tailwinds from escalating geopolitical and trade tensions, easing monetary policy, and strong central bank buying,” analysts at the bank said.
Meanwhile DoubleLine Capital’s Jeffrey Gundlach, aka the Bond King, forecast that gold could climb to $4,000 based on central bank buying.
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