A gold shop Photo: VCG
Gold prices extended their rally on Tuesday after setting a new record high last Friday, as investors rushed to store the precious metal amid rising global economic uncertainties and trade tensions mainly fueled by the high tariffs of the US. Investors are increasingly turning to gold as a safe-haven asset, an analyst said.
On Tuesday, international gold prices soared. Spot gold pierced the $3,025-per-ounce mark as of 4:30 pm (Beijing time), while COMEX gold futures prices surpassed a high of $3,035 per ounce, reinforcing gold's strong upward momentum.
Main gold futures contracts on the Shanghai Futures Exchange broke through the 700 yuan ($96.78) per gram benchmark on Tuesday, reaching a new high.
The high US tariffs on imports have played a major role in the recent gold price surge, Beijing-based financial expert Zhao Qingming told the Global Times on Tuesday.
Zhao said that US tariffs on major trading partners have sparked global economic uncertainty, leading investors to seek refuge in gold, a traditional safe-haven asset.
On Friday, both COMEX gold futures and spot gold prices broke through the $3,000 per ounce mark, setting record highs.
Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times that the worsening US debt situation and possible policy shifts by the Federal Reserve have further boosted gold's appeal.
He said that growing purchases by central banks and households worldwide acted as a key driver of market demand for gold.
Besides, major financial institutions have raised their gold price forecasts, with UBS being the latest to adjust its outlook, citing heightened risks of escalating trade conflicts.
Analysts with UBS stated in a report on Monday that gold could reach $3,200 per ounce during the next four quarters, an increase from the prior forecast of $3,000 per ounce. They noted that lingering trade tensions will reinforce gold's status as a dependable store of value in time of uncertainty.
Other institutions have also revised their predictions. Goldman Sachs recently raised its year-end gold price target to $3,100 per ounce, while Macquarie Group projected that prices could surge to $3,500 per ounce as early as the third quarter of this year.
Shanghai Gold Exchange (SGE) chairman Yu Wenjian said in a recent interview with the Financial News that the SGE will expand the use of the "Shanghai Gold" benchmark, enhance offshore yuan utilization, increase the global recognition of yuan-denominated gold pricing and strengthen China's role in the international gold market.
