Gold prices shattered the $3,000 mark for the first time on Friday as a wave of economic and geopolitical uncertainty sent investors scrambling for safety, Reuters reported.

The precious metal’s meteoric rise has been fueled by fears over U.S. trade policy, inflation concerns, and a volatile stock market. With central banks ramping up purchases and expectations of Federal Reserve rate cuts strengthening, gold’s rally shows no signs of slowing.

Spot gold climbed 0.1% to $2,991 an ounce by mid-morning trading in New York, hitting a record high of $3,004.86 earlier in the session. The rally has pushed prices up 14% year-to-date, following a 27% surge in 2024.

Market Jitters Drive Gold’s Unstoppable Rise

Investors increasingly view gold as the ultimate hedge against economic turmoil, with U.S. President Donald Trump’s tariff war intensifying market instability.

The S&P 500 reportedly plunged into correction territory, shedding $4 trillion in value over the past week, fueling a rush into safe-haven assets. Gold’s ascent is not just a reaction to stock market declines.

Central banks have been aggressively stockpiling bullion, with China’s reserves increasing for a fourth consecutive month in February. Exchange-traded funds (ETFs) have also seen surging inflows.

The SPDR Gold Trust (GLD), the world’s largest gold-backed ETF, reported holdings reaching 907.82 metric tons in late February, the highest since August 2023.

Central Banks and ETF Demand

Expectations of monetary easing by the Federal Reserve are another key driver of gold’s momentum. The central bank has already cut rates by 100 basis points since September, and traders now anticipate further reductions starting in June.

A weaker dollar, historically inversely correlated with gold, has provided further tailwinds. Analysts suggest that if the Fed resumes aggressive rate cuts, gold could continue its rally. While many analysts remain bullish on gold, some warn of a potential correction if trade tensions ease and equity markets recover.

However, institutions remain optimistic. Goldman Sachs recently raised its year-end 2025 gold target to $3,100, while Macquarie suggested prices could challenge $3,500 if the U.S. budget deficit worsens. With economic uncertainty lingering and central banks continuing to buy, gold’s rally may still have room to run. Investors, for now, remain firmly in safe-haven mode.

Source: Finance Magnates