Gold tide: how Donald Trump has unleashed the price of the precious metal
The year 2024 was one of the most breakthrough years for gold in history. Over the year, quotes for the precious metal jumped by more than a third. In 2025, the rally continues, and several new records were set, this time due to the trade wars of U.S. President Donald Trump. Thus, the precious metal has shown resilience in both favorable and nervous environments. Overall, over the past five years, gold has become one of the fastest-growing safe-haven assets. Why gold is getting more expensive under any circumstances and whether it will break through the $3 thousand per ounce mark - in the material of "Izvestia".
Gold and tariff war
On February 5, gold prices set another record, on the futures market they reached $2900 per troy ounce. This was followed by a slight pullback, but prices remained high - in the neighborhood of $2850-2860. Futures went up even more. The reason for such a rally was the duties imposed by Trump against China in the amount of 10% on all goods - and the Celestial Empire's retaliatory measures. Even the strengthening of the dollar, fixed in recent days, did not prevent the growth of gold quotations. Although normally these two assets move in opposite directions or at least not synchronously.
In general, since the beginning of the year, gold has risen in price by almost 10%. This is a very fast growth by historical standards. In the past, spikes of such scale in such a short period of time were recorded only in 2011, in 2020 against the background of a pandemic and in the spring of 2024.
The main reason for the rise since the beginning of the year was fears of renewed inflation. They were associated both with the fact that global central banks were focused on lowering rates, and with the coming to power of Donald Trump. Not only trade duties were associated with the latter - although the talk about them has been going on for quite some time - but also the general plans of the future government, which consisted of tax cuts and, as a consequence, the growing budget deficit.
Another factor can be added in recent weeks. An unexpected troublemaker was the Chinese neural network DeepSeek, which made a sensation on the American market. Taking into account its relative cheapness in preparation in comparison with language AI models from the USA, investors decided that the American market of high-tech stocks was "overbought". A massive sell-off of related securities - from Apple to Nvidia - began. Investors preferred in this situation a reliable "safe harbor", which was precious metal.
China's DeepSeek neural network
As the expert on the stock market of "BKS Investment World" Lyudmila Rokotianskaya noted, the current spiral of gold growth is associated to a greater extent with the policy of Donald Trump.
- The introduction of duties on goods from other countries is a pro-inflationary factor for the US. And gold acts as the main defense against dollar inflation. Other factors include central bank purchases. But these data on the actions of the world Central Banks come with a great delay, so we will not be able to assess their role in the current growth soon. It is only known that in November central banks used the correction to increase their positions in gold.
Characteristically, gold is now moving in opposition to cryptocurrencies. For example, bitcoin has lost almost 7% over the last week. Other crypto has fallen even more. In general, it has once again been demonstrated that bitcoin cannot yet serve as a substitute for gold, despite the fact that some properties of these assets are similar.
Growth into infinity
If you analyze the change in gold quotes over the past five years, the upward trend is striking. Since the beginning of the pandemic, it has risen in price by more than 80%, with the strongest growth in 2020 (amid panic over the coronavirus and expectations of a huge injection of funds into the global economy through monetary and fiscal policy), as well as in 2024-2025, when the main driver was the expectation of rate cuts by central banks.
Important point: gold rallied on these expectations, but the reverse is not true. A sharp increase in rates in 2022-2023 due to a surge in inflation did not lead to a significant decline in precious metal quotations. This suggests a high margin of safety for gold, which grows in favorable conditions and remains stable in unfavorable ones. There is a direct correlation with geopolitics, which has been in a constant storm since the early 2020s. There are wars, epidemics, and doubts about the role of the dollar due to trade wars and maximum use of sanctions.
Taking an even broader context, gold is in a long-term growth phase. In the first half of the 2000s, a troy ounce was worth only $250-300. At the same time, in real terms, compared to, for example, the 1980s, the decline was a multiple of that. At some point there was talk that gold had lost all meaning as a financial asset for savings and should remain only as jewelry and industrial metal. But further events have shown that this is far from true. For 20-odd years the growth of quotations was tenfold. Of course, in real terms, the rise is more modest, about five times, but this is a very solid indicator.
A big role is played by central banks, which bought a record amount of gold in 2023. China, Russia and Turkey are trying to increase their gold reserves amid sanctions and general turmoil in the global economy, ignoring even the fact that the prices for purchases are not too good now.
There is another factor - production. Production of most minerals is increasing year on year. As a rule, long-term decline or stagnation in the commodity market does not happen very often. With gold, the situation is somewhat different. The production record was set in 2018. All in all, given the current industrial rates, the gold in the subsoil (about 57 thousand tons) will not be enough for 20 years. There is scrap processing, but it will not be able to balance the growing demand indefinitely. One can only hope for the discovery of new deposits, but no major finds have been discovered in recent years. Exotic methods like mining gold from seawater are unprofitable at current prices.
A gold mine in Colombia
- If we talk about the long-term prospects of gold, it is difficult to predict anything. In recent years it has shown a very good result, but it can also stagnate and even fall quite well," said Rokotyanskaya.
Ivan Efanov, an analyst at Digital Broker, believes that gold will continue to grow in 2025 and exceed the $3,000 mark. Geopolitical tensions persist, fiat currencies continue to be printed, and the Trump administration adds to the uncertainty of tomorrow.
- Central banks will continue to buy gold bullion, adding to their countries' reserves. And the people of China and India will not change their national traditions and will continue to sponsor the growth of the gold jewelry market, which already accounts for more than 40% of all sales. If we move closer to our market, the first thing we would like to say about the ruble and its property of stable devaluation against the dollar. Therefore, for Russian investors, gold is a particularly valuable asset that can protect against the weakening of the ruble and inflation," the analyst concluded.
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