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Recently, the gold market has been vibrant as gold prices continuously set new records. On April 17, spot gold prices surged strongly, crossing the $3,350 mark and reaching a high of $3,357, increasing by over 3.6% in a single day - a new record. As a traditional safe-haven asset, gold has increasingly attracted attention amid escalating global trade tensions since Trump's presidency, coupled with economic pressures from the US economy. YTD, gold prices have risen over 26%, nearly matching last year's annual increase, indicating a strong growth trend.
Safe-haven sentiment is increasing, gold becomes the top choice during uncertain periods
The core factor driving this significant gold price increase is the surge in safe-haven demand. After Trump's presidency and implementation of more confrontational trade policies, global trade tensions quickly escalated. New tariff policies applied to China and other economies not only disrupted the global supply chain but also made markets worried about the dual risk of "re-inflation + economic recession".
In the US specifically, economic data has been sending weak signals. The University of Michigan's consumer confidence index declined for the fourth consecutive month in April. Service sector data continues to deteriorate, reflecting declining US consumer confidence in economic prospects.
Markets previously expected the Federal Reserve (Fed) to make more aggressive interest rate cuts in 2025, but recent statements by Fed Chair Jerome Powell and other officials suggest the Fed will maintain a "wait and see" approach, aiming to balance employment and inflation control. This has made interest rate cut expectations diverge and increased policy uncertainty.
Markets are even more concerned about the potential threat to Fed's independence from Trump. Last week, he filed an urgent petition to the US Supreme Court, requesting the right to dismiss leaders of independent agencies - a move seen as preparation for dismissing Powell. The day before, Trump strongly criticized Powell's interest rate policy as "always late and wrong", simultaneously declaring an immediate need to remove Powell. If the Fed's monetary policy independence is compromised, market concerns about uncertain risks will increase, and safe-haven sentiment could continue driving gold prices upward.
In the context of "macro chaos + uncertain policies" accumulating, gold once again becomes the core safe haven for global Capital.
Inflation expectations support gold price increases
Recently, market expectations that the Fed will cut interest rates three times this year are increasing, with some institutions even predicting a potential aggressive cut cycle could start as early as May. However, in his April 17 speech, Fed Chair Jerome Powell sent more "wait and see" signals, suggesting new tariff policies might cause short-term inflation to surge again, while also pressuring economic growth. He emphasized that balancing "full employment" and "price stability" still requires caution. This statement forced markets to reassess the interest rate cut timeline, simultaneously increasing demand for safe and inflation-resistant assets like gold.
Notably, although recent US CPI and PPI data show a slight downward trend, markets generally believe the "inflation return" wave will only become clearly apparent in summer this year, due to the delayed transmission effect of trade policies on consumer prices. This means the Fed might face more complex policy dilemmas, and gold's anti-inflation role during this period will be further consolidated.
Capital Inflow Consolidates Gold Price Upward TrendCapital flow choices typically reflect the market's true expectations. According to data as of April 17, the gold holdings of the world's largest gold ETF - SPDR Gold Trust - reached 952.29 tons. Since Trump took office, this fund has net purchased over 81 tons of gold, equivalent to a 9.3% increase. This trend indicates that Western sovereign funds and institutional investors are systematically restructuring their investment portfolios to address potential long-term risks.
Simultaneously, continuous gold purchases by central banks worldwide also strongly support gold prices. According to the World Gold Council, global gold investment demand increased by 25% in 2024, reaching a 4-year high, and this trend is expected to continue in 2025. Particularly in the context of emerging countries implementing "de-dollarization" strategies, adjusting foreign exchange reserves has pushed gold to a strategic position as a "currency alternative".
With its role as a safe haven, hedge against inflation, and protection against USD credit risks, gold's medium and long-term price increase has become a market consensus. In its latest report, Goldman Sachs raised the international gold price target to $3,700/ounce by year-end and forecasts it could reach $4,000 by mid-2026.
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