As the sparks of the U.S.-China tariff war continue, gold, a safe asset, is continuously breaking record highs. The price of gold surpassed $2,900 on the 10th (local time), recording another all-time high. But is it okay to invest in gold now that it has already risen so much?
On the 10th (local time), gold futures for April at the New York Mercantile Exchange (COMEX) finished at $2,936.8 per troy ounce (1 ozt = 31.10 g), up 1.7% from the previous session. Spot gold traded at $2,905.24 per ounce.
The price of gold has been breaking record highs since U.S. President Donald Trump took office. According to the Financial Times (FT), gold inventories at the New York Mercantile Exchange (COMEX) increased by 88% after the U.S. presidential election in November last year, leading to a shortage of gold in London, the traditional global trading hub. Speculation that uncertainty from tariff policies would increase under the Trump administration sparked a gold rush to the U.S. for risk hedging.
Will the sharply rising gold price continue to increase? Securities firms believe there is a sufficient possibility of that. Lee Young-hoon, a researcher at Samsung Securities, noted, "Even in the situation where spot gold surpasses $2,800 per ounce, breaking all-time highs, the upward trend in gold may continue."
Hwang Byeong-jin, a researcher at NH Investment & Securities, said, "As long as the monetary policy stance of the Federal Reserve (Fed) remains accommodative, the bullish outlook on gold prices is valid." Hwang also stated that if gold prices surpass $3,000 per ounce within the year, he would revise his target price to $3,300.
One reason for the expectation that gold prices will rise further is the concern over tariff risks originating from President Trump. It is analyzed that demand for safe assets is bound to grow in a situation where tariff policies continue to heighten uncertainty.
Lee Young-hoon noted, "Trump's tariff policy may stimulate prices, possibly diminishing expectations for price decline, but concerns about the economy will continue, leading to a preference for safe assets," and said, "(Stimulating prices through Trump's tariff policy) will not act as a bearish factor for precious metals."
Particularly, the diversification trend of global central banks' foreign currency reserves to mitigate volatility in the U.S. dollar is concentrating on gold among major reserve currencies. Hwang Byeong-jin explained, "Moreover, the trade war represented by Trump tariffs is another motivating factor for central banks to purchase gold."
There are analyses suggesting that if gold has risen too much, it may be worth paying attention to silver. Silver has increased by over 30% compared to the beginning of last year, coming close to $35 per ounce at one point, but its price decreased after the U.S. presidential election. The historical high price of silver was about $50 per ounce recorded in 2011, and it is still trading below that level. Hwang Byeong-jin stated, "The direction of the increased real interest rates compared to the past is expected to determine the intensity of silver price increases," and explained, "Attention may shift to relatively cheap silver compared to gold, which could lead to visible inflows of funds, but silver prices tend to be more volatile compared to gold."