The escalating trade war between the U.S. and China is weakening the dollar and strengthening gold as a safe-haven asset. Analysts at Goldman Sachs predict that increased political uncertainty could push gold prices to $3,300 per ounce by the end of the year. Other major forecasts, including UBS and JP Morgan, also suggest the potential for gold prices to exceed $3,000 per ounce.
Trade War Fuels Market Uncertainty
The U.S. administration has imposed tariffs on Canada, Mexico, and China, triggering retaliatory measures from these countries. Markets have reacted accordingly, with a weaker dollar and stronger gold prices.
- Gold prices rebounded after last week’s correction, surpassing $2,900 per ounce as of March 6 at 4:00 PM.
- New U.S. tariffs on China, Canada, and Mexico (including a 25% tax on imports from Canada and Mexico and an additional 10% tariff on Chinese goods) have escalated tensions.
- The result has been a decline in stock markets and a flight to gold, which is seen as a safe-haven investment.
Record Gold Reserves at COMEX
The COMEX exchange in the U.S. has recorded historically high levels of deposited gold, now holding nearly 40 million ounces (over 1,230 tons), allocated for futures contracts.
- In January 2025, COMEX had 680 tons of gold, meaning reserves have nearly doubled in just two months.
- In December 2024, reserves stood at 550 tons, showing an unprecedented accumulation of gold.
- The previous record was set in mid-2020, during the pandemic, but current reserves now exceed that level.
This rapid increase in gold stockpiles reflects a significant transfer of gold from Europe to the U.S., driven by investor demand for physical delivery.
Analysts Expect Further Growth in Gold Prices
The current market conditions suggest favorable prospects for gold, with analysts forecasting continued price increases. Geopolitical uncertainty, stagflation risks, and warnings from top economists make gold an increasingly attractive investment.
- Goldman Sachs expects prices to reach $3,100 per ounce by the end of 2025.
- UBS forecasts gold prices could rise to $3,200 per ounce.
- JP Morgan maintains an optimistic outlook, predicting $3,000 per ounce in Q4 2025.
Key Drivers Behind the Gold Rally
- Rising geopolitical tensions – Trade disputes and global instability increase demand for safe-haven assets.
- U.S. economic concerns – Weakening economic indicators and stagflation risks make gold an attractive hedge.
- Increased central bank gold purchases – Higher-than-expected demand is driving up gold prices.
Ole Hansen (Saxo Bank) notes that deteriorating U.S. economic data and growing stagflation risks are fueling demand for gold. Meanwhile, Lina Thomas (Goldman Sachs Research) highlights central bank gold purchases as a key factor supporting price growth.
Could Gold Hit $3,300 per Ounce in 2025?
Goldman Sachs’ previous forecast expected gold prices to reach $2,890 per ounce. However, increasing demand from central banks and ETFs—combined with falling interest rates—has led to an upward revision.
While speculative traders could reduce their long positions, potentially creating short-term downward pressure, sustained political and economic uncertainty could keep gold prices on an upward trajectory.
“If political uncertainty—especially regarding tariffs—remains high, prolonged speculative activity could push gold prices to $3,300 per ounce by year-end,” says Lina Thomas from Goldman Sachs Research.
Ray Dalio Warns of Rising U.S. Debt Crisis
The financial markets, including gold, could also be impacted by a looming U.S. debt crisis—a concern raised by Ray Dalio, founder of Bridgewater Associates. His new book, How Countries Go Broke, analyzes debt cycles and the risk of economic collapse.
Dalio warns that if the U.S. does not take steps to reduce its deficit, a lack of buyers for U.S. Treasury bonds could trigger a severe financial crisis within three years. This scenario would further increase gold’s appeal as a hedge against economic instability.
Exploding U.S. Debt: Interest Payments Exceed Military Budget
The U.S. national debt is growing at an alarming rate, increasing by over 50% in the past four years. Compared to 2008, when the debt was $9 trillion, it has now quadrupled to $36 trillion by the end of 2024.
- Interest payments on the debt now exceed the U.S. defense budget.
- In 2020, interest payments were half of military spending; they have since grown by 220% to over $1 trillion per year.
- Meanwhile, the U.S. defense budget has increased by only 30% in the same period.
This unsustainable debt trajectory could have catastrophic consequences for the U.S. economy and further strengthen gold’s role as a financial safe haven.
Conclusion
With rising geopolitical tensions, a weakening U.S. dollar, central bank gold accumulation, and a looming debt crisis, gold prices are expected to continue climbing. Analysts from Goldman Sachs, UBS, and JP Morgan are all raising their price targets, with predictions of gold surpassing $3,000 per ounce and possibly reaching $3,300 by the end of 2025.
Source: ManagerPlus
