Why Gold Prices Surged to a Record High on Wednesday

Gold prices rose to another record high on Wednesday as stocks tumbled after AI chip giant Nvidia warned its earnings would take a $5 billion hit from escalating tensions between the U.S. and China. 

Gold futures contracts were up more than 3% at a record high of about $3,350 an ounce on Wednesday afternoon. 

Gold prices have soared more than 25% since the start of the year as investors have flocked to safe havens amid mounting uncertainty about tariffs and their economic fallout. Gold ETFs recorded net inflows every week but one in the first quarter, with demand jumping to its highest level since 2022 in late February and again in late March.

President Trump’s announcement earlier this month of sweeping “reciprocal” tariffs may push demand even higher in April. In the week after Trump’s tariff announcement, 49% of fund managers surveyed by Bank of America labeled “long gold” Wall Street’s most crowded trade. It was the first BofA Global Fund Manager Survey in two years in which “long Magnificent Seven” wasn’t thought to be the most popular trade. The preponderance of fund managers (42%) think gold will be the best-performing asset of 2025.

“The case for adding gold allocations has become more compelling than ever in this environment of escalating tariff uncertainty, weaker growth, higher inflation, geopolitical risks & diversification away from US assets & the US$,” wrote UBS analysts in a note on Monday.

“We acknowledge the poor historical operational/cost performance of gold miners but remain bullish gold equities,” the analysts continued. Shares of Newmont (NEM) and Barrick Gold (GOLD) both followed gold prices higher on Wednesday.

Can the Rally Keep Going?

There are several reasons to expect the recent run-up to persist, according to the World Gold Council, a gold miner trade association.

First of all, central banks have been key drivers of demand for gold over the past few years, and researchers don’t expect them to let up soon. Investors are also historically underexposed, with gold ETFs accounting for just 1.6% of the value of all U.S. ETFs, compared with 7.6% in 2011—the peak of a rally comparable to today’s. Plus, geopolitical and economic uncertainty are likely to remain elevated as the end of the White House’s 90-day tariff pause approaches.

Risks to the rally include the possibility that soaring prices slow demand from investors and central banks, or that a liquidity crisis—of which the analysts see increasing risk—could force investors to sell gold to cover margin calls. The resolution of trade tensions through bilateral agreements could also reignite investors’ risk appetite and act as a headwind to gold.