Key Takeaways
- Gold prices hit another record high on Monday to cap off a quarter in which it gained 20%.
- Retail investors have flocked to gold, a traditional safe-haven asset, in response to the tariff and broader economic uncertainty that has weighed on stocks in recent months.
- Bank of America analysts last week raised their gold price target to $3,500 an ounce, citing demand from retail investors, central banks, and Chinese insurers.
Gold advanced to a record high of more than $3,100 an ounce on Monday, capping off a blockbuster quarter of gains.
Gold futures rose 20% in the first three months of the year, the metal’s biggest quarterly gain since 1986, according to Reuters.
Investors have rushed to safe havens like gold and U.S. Treasurys in response to the uncertainty created by President Trump’s unpredictable tariff threats. Trump over the last two months has shaken investor confidence by sporadically announcing, delaying, diluting, and escalating trade wars with many of America’s largest trading partners. The on-again, off-again approach to tariffs has also left consumers and businesses worried about the economy.
Economic data have remained strong this year, but researchers warn that lower confidence and heightened uncertainty could soon translate into less spending and slower growth. Meanwhile, tariffs are likely to raise prices, potentially reigniting inflation or making it stickier than it otherwise would be.
Investors Rush Into Gold as Stocks Slide
Individual investors have rushed into gold as uncertainty has hammered the stock market. Focused commodities ETFs, which include gold funds, recorded inflows of $4.7 billion in February, their biggest monthly haul since March 2022, according to Morningstar data. The SPDR Gold Shares ETF (GLD) accounted for $3.4 billion of that total. With stock market turbulence and gold prices increasing throughout March, it’s likely inflows accelerated in the last month of the quarter.
Retail investors have added fuel to what was already a strong gold rally. Central bank demand, expectations for lower interest rates, and geopolitical tensions lifted prices to record highs throughout last year. All of those factors remain relevant for gold investors, which is why some Wall Street analysts have recently lifted their price targets.
Bank of America strategists last week forecast gold would rise to $3,500 an ounce in the next two years. Increased demand, they said, was likely to be driven by central banks reducing their U.S. dollar and Treasury holdings, as well as retail investors and China’s insurance industry, which was recently given the green light to invest in gold for the first time.
Gold was at $3,155 in late trading Monday, up more than 1% on the day and 10% since the start of the month.
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