Gold Prices Hit All-Time High At $3000 Per Ounce - Key Reasons Behind The Surge

Gold prices surged to a record high on March 14 in the international market as they crossed the $3000 per ounce mark. On March 14, gold prices hit an intraday high as the yellow metal traded at $3,005.08 per ounce. However, the price of gold fell nearly 0.11 per cent to $2,984.42 per ounce.

Closer home in India, gold prices surged to a new record high on the Multi Commodity Exchange (MCX) on March 14 as the April contract opened in the green at Rs 87,781 per 10 grams and climbed further to a new peak of Rs 88,280 per 10 grams.

Several factors have contributed to the rising price of the yellow metal. According to a Bloomberg report, in the last twenty-five years, the price of gold has grown 10-fold. In recent times the demand for gold has been consistent and increasing on account of macroeconomic uncertainties. Central banks have emerged as key buyers of gold since the beginning of the Russia-Ukraine conflict in 2022. Additionally, key US trade partners such as China, India, Poland, and Turkey have also increased their gold holdings. Here’s a look at some key factors which are driving the prices of gold higher:

Economic Uncertainty

Geopolitical instabilities and macroeconomic uncertainties have contributed to the rising demand for safe-haven assets. Traditionally gold has been considered a hedge against economic downturns and uncertainties. As global markets grapple with rising uncertainty and fears of potential recessions, investors are seeking safe haven assets like gold. Earlier on March 9 in an interview with Fox News, Trump left open the possibility of a downturn and a recession in the US economy.

“I hate to predict things like that. There is a period of transition because what we’re doing is very big,” Trump said. “We’re bringing wealth back to America. That’s a big thing…It takes a little time, but I think it should be great for us,” Trump said.

Trump’s Trade Tariffs

The announcement of reciprocal trade tariffs on key allies by US President Donald Trump has increased uncertainty and escalated global trade tensions. Ahead of the imposition of tariffs investors are turning to gold fearing a potential fallout from an unpredictable trade environment.

According to a Bloomberg report New York’s Comex futures exchange depositories have seen an addition of over 23 million ounces of gold, worth nearly $70 billion between election day and March 12. Notably Trump has already enforced tariffs on Canada, Mexico and the European Union, and on the import of Chinese goods.

Weak Investor sentiment 

The recent surge in gold prices and the crossing of the $3,000 mark highlight gold’s role in times of fear and economic instability. Weak investor sentiment has contributed significantly to the demand for gold. On the other hand expectations around a rally in the price of gold have also attracted investors. Historically gold prices have increased significantly during times of increased economic uncertainty.

The price of gold crossed the $1,000 per ounce mark for the first time in the aftermath of the financial crisis of 2008. Notably gold prices crossed the $2,000 per ounce mark during the Covid 19 pandemic. Prices declined back towards $1,600 after the pandemic but witnessed a rise after 2023 when central banks started purchasing gold bullion to use it as a hedge against increasing dollar rates.