Gold prices soar with tariff "double blow"
One of the biggest shocks was the “Liberation Day Tariffs” announced on April 2, targeting key US trading partners. In less than a month, gold prices jumped from below $3,000 an ounce to nearly $3,500 an ounce, before settling back around $3,300 an ounce in May as US-China tensions eased. Still, risks lurk.
Mr. Heng Koon How, Head of Market Strategy at UOB Bank (Singapore), said the gold market may enter a short-term accumulation phase, but the wave of gold buying from central banks, especially in Asia and emerging markets, has not cooled down.
Meanwhile, Goldman Sachs predicts that gold prices could reach $3,700 an ounce by the end of the year. Lina Thomas, a commodity strategist at the bank, said investors have been increasing their holdings of gold since March, when concerns about the US fiscal situation increased. "If the situation continues to deteriorate, gold could absolutely break records," she said.
The biggest concern is the “One Big, Beautiful Bill” — a super bill that would permanently legislate massive tax cuts that mostly benefit the wealthy, at an estimated cost of $4.6 trillion over the next decade.
Economists warn that if passed, this tax and spending package could push the US budget deficit to 125% of GDP. This would be a huge burden, threatening the stability of the US economy, especially if Mr. Trump’s tariff strategy does not bring the expected results.
In that context, Goldman Sachs recommends increasing the proportion of gold in investment portfolios to hedge against inflation, recession and macroeconomic instability. Meanwhile, central banks, with about 17% of all gold ever mined in their hands, continue to see gold as an important hedge.
Gold still has strong appeal as a safe haven (Photo: Lim Yaohui/ ST).
Smart money flows to gold
Gold is not only a haven for central banks, but it is also attracting strong cash flows from institutional and individual investors. Ms. Louise Street, senior market expert at the World Gold Council (WGC), said that cash flows into gold ETFs have skyrocketed since the third quarter of 2024. In April 2025 alone, the amount of capital poured into gold ETFs in Asia exceeded the total in the first quarter, showing that the demand for gold storage is hotter than ever.
According to the WGC, total demand for gold bars and coins in the first quarter of 2025 increased by 35% compared to the same period last year - the highest level since 2016. Although high prices caused jewelry purchases in Singapore to fall by 20%, total transaction value increased by 9%, reflecting the belief that gold is still a good "value-holder" in the storm of inflation.
“Gold’s traditional role as a hedge continues to be reinforced as uncertainty increases,” said Shaokai Fan, WGC’s regional director for Asia- Pacific , noting that central banks are quietly increasing their holdings of gold to reduce their reliance on the US dollar and other assets that are vulnerable to freezing, as Russia will do after a conflict in 2022.
Currently, the proportion of gold in China’s foreign exchange reserves is still below 10%, while the figure in the US, Germany, France and Italy is above 70%. According to Ms. Thomas of Goldman Sachs, this is the driving force behind a “gold hoarding race” among developing countries to protect against financial and political shocks.
In Singapore, the region’s leading financial hub, gold trading is also more active than ever. UOB maintained its third-quarter gold price forecast at $3,400 an ounce and raised its fourth-quarter outlook to $3,500. The bank said that while central bank buying may slow, safe-haven demand remains a key factor in keeping gold prices high.
In the long term, factors such as lack of confidence in the US's ability to maintain its economic role, inflation concerns, geopolitical tensions and risk-off flows remain strong pillars supporting gold prices.
As financial markets continue to fluctuate wildly, gold - an asset that has proven its worth over thousands of years - appears to be entering a new cycle of strong comebacks.
Source: https://dantri.com.vn/kinh-doanh/vang-am-tham-giu-ngoi-vuong-giua-loat-cu-soc-tu-nuoc-my-20250530180546543.htm
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