Gold prices surge as Donald Trump raises China tariffs to 125 percent

Gold prices have gone up again. This time, the reason is a new move by former US President Donald Trump. He has raised tariffs on Chinese goods to 125%, and this has created worries in the global market. As a result, many investors are now buying gold to keep their money safe. Gold is often used as a "safe haven" during uncertain times, such as when inflation or political tensions rise.

According to a report by Reuters, spot gold was valued at $3,119.18 per ounce at 3 am GMT on Thursday. This is the highest jump since October 2023. Gold futures in the US also went up by 1.8%, reaching $3,135.50 per ounce.

Gold has already gone up 18% in 2025. The main reasons are Trump’s strong tariff plans, fears of inflation, possible interest rate cuts by the US Federal Reserve, and increasing global tensions. There is also strong demand for gold from central banks and investors who are buying gold-based funds.

Why people buy gold now

Trump’s new tariff policy has had an immediate effect. China responded with an 84% tariff on American goods, starting Thursday. This kind of trade war creates fear in financial markets. Many investors worry that global trade could slow down and prices could rise. When people expect this kind of economic trouble, they move their money into gold because it holds value better than stocks or currency during such times.

One market expert, Edward Meir from the company Marex, told Reuters that if the world goes through a slow economic period, interest rates may fall, but inflation will stay high. This, he said, will make gold even more attractive.

Another expert, Dominic Schnider from UBS Global Wealth Management, spoke to Bloomberg. He said, “We are still positive about gold. The next boost will come when the Federal Reserve steps in to make changes.”

Some experts believe that gold prices will continue to rise. Many predict that gold could reach $3,200 per ounce before the end of this month, or even earlier. The reason is that markets are still unsure about how the US economy will deal with Trump’s policies and China’s response.

Investors are also watching the Federal Reserve’s meeting notes closely. The Fed recently said that inflation remains a big concern, and economic growth might slow down. Most Fed members agree that tough choices may be needed soon to manage the economy.

This uncertainty also plays in gold’s favor. When people do not feel confident about the economy, they stop buying stocks and put their money into gold instead.

Central banks and ETFs push demand

Another big reason gold prices are going up is that central banks in different countries are buying large amounts of gold. This is a strategy many banks use to protect their reserves. At the same time, investors are putting money into gold exchange-traded funds (ETFs). These funds are an easy way to invest in gold without holding physical gold.

This strong demand adds more pressure to prices. When many people buy gold at once, the price naturally goes higher.

There are more reasons people are buying gold right now. Tensions in the Middle East and the ongoing Russia-Ukraine war have made investors nervous. Many fear that if these conflicts get worse, oil and food prices will rise, leading to even higher inflation.

Since gold is one of the few assets that keeps its value in such times, its demand goes up whenever political tensions rise globally.

Another key factor is the US Federal Reserve’s expected move on interest rates. Many experts believe that the Fed will eventually lower rates in the coming months to support the economy. When interest rates are low, gold becomes more attractive. This is because gold does not pay interest like bank deposits, so when deposit rates are low, people prefer gold.

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Edward Meir from Marex said this situation — slow economic growth and high inflation — is likely to stay for much of the year. And this could lead to higher gold prices.

Interestingly, even though Trump has raised tariffs, Asian stock markets bounced back recently. One reason for this was that Trump paused some of the new tariffs for 90 days, which gave some hope to traders and investors. The Shanghai stock index also gained despite the tariff increase.

Experts believe this pause is only temporary, and more trouble could come if both countries do not reach a trade deal. That is why gold remains the top choice for many investors.

This is not the first time Trump has used tariffs as a tool. During his earlier time in office, he also raised tariffs on several countries. He believes that such actions help American industries by making foreign goods more expensive and less attractive in the US.

But this strategy also creates trade fights. Countries that are hit by tariffs often react by placing their own tariffs, which then hurts businesses and raises prices.

This time, even though Trump has hiked tariffs sharply, he has temporarily lowered some tariffs on other countries. This has created more confusion in the global markets.

Many Indian investors are also following these developments closely. People are wondering if the Indian stock market will suffer due to the global trade war. Some experts believe the worst might be over, but others think Trump’s tariffs could still hit Indian markets, especially if global growth slows down.

Gold, on the other hand, continues to be popular in India. As one of the biggest buyers of gold in the world, India is affected by global price changes. When prices go up globally, local gold becomes more expensive too.

All signs point to a strong year for gold. The rising tensions between the US and China, the fear of inflation, and the expected rate cuts by the US Fed have created the perfect conditions for gold to rise. Many experts now expect that the price of gold could hit $3,200 per ounce very soon.

If economic fears continue, gold could go even higher. Whether you are an investor or just someone following the news, it’s clear that gold is playing an important role in today’s uncertain world.