By Gold prices surged to their highest point in over 12 weeks on Wednesday, driven by a notable increase in safe-haven demand for the precious metal.
Current market sentiments and uncertainty around US President Donald Trump’s trade tariff narrative are expected to keep bulls interested in the yellow metal for the time being as gold searches for further upside.
This surge can be attributed to a confluence of factors contributing to market uncertainty and investor anxiety, pushing them towards the perceived safety of gold.
“A renewed risk-aversion wave appears to put a fresh bid under the Gold price as markets digest US President Donald Trump’s latest tariff threats,” Dhwani Mehta, senior analyst at FXstreet, said in a note.
At the time of writing, the February gold contract on COMEX was at $2,765.69 per ounce, up 0.3% from the previous close.
The contract had hit $2,772.30 per ounce earlier in the session, its highest level since November 1, 2025.
Gold prices benefit from trade war fears
Reuters reported earlier that President Trump said, “we are talking about a 10% tariff on China because they sell fentanyl.”
Fentanyl, a strong synthetic opioid for severe pain, has a high risk of addiction, overdose, and respiratory depression.
The tariffs will be effective from February 1. Trump also stated that the “European Union will be in for tariffs.”
Trade war fears escalated as Chinese Vice Premier Ding Xuexiang cautioned against the conflict, stating that “there are no winners” in a trade war during the World Economic Forum in Davos. Consequently, risk sentiment soured due to these heightened tensions.
“The sell-off in Chinese stocks on looming US tariffs revived the flight to safety theme, lifting the safe havens – the US Dollar and the gold price,” Mehta said.
She added:
However, it remains to be seen if gold price sustains the three-day winning streak as risk flows could return as most of these tariffs announced by Trump were priced in.
Trump’s tariff threats on Canada and Mexico
If Trump introduces an import duty of 25% on imports from Canada and Mexico from 1 February as announced, this could also affect gold and silver.
The announcement of a potential 25% import duty on goods from Canada and Mexico, said to be implemented by Trump from February 1, has far-reaching implications.
Beyond the immediate impact on trade relations with these neighboring countries, the repercussions could extend to the precious metals market, affecting the prices of gold and silver.
Investors may seek safe-haven assets like gold and silver, driving up their demand and subsequently their prices.
Moreover, the import duty could disrupt supply chains for industries that use gold and silver, potentially leading to shortages and further price increases.
The impact on the Canadian and Mexican economies could also indirectly affect gold and silver prices.
A weakened economy in these countries could lead to a decreased demand for these precious metals, potentially causing a price drop.
The World Gold Council states that Canada holds the position of the fourth-largest gold mine producer globally. Meanwhile, the Silver Institute reports that Mexico is the world’s largest silver mine producer by a significant margin.
However, if the tariff leads to inflationary pressures in the US, it could further drive up the demand for gold and silver as a hedge against inflation.
The uncertainty surrounding the potential import duty and its potential impacts on the global economy and financial markets is likely to keep gold and silver prices volatile in the coming weeks.
“In addition, the price premium for gold on the Comex has widened significantly compared to the spot price in London,” Carsten Fritsch, commodity analyst at Commerzbank AG, said.
Sharp rise in COMEX gold inventories
“The uncertainty surrounding Trump’s first measures as US president fuelled demand for gold as a safe haven,” Fritsch added.
“This can be seen, among other things, in the strong inflow of more than 10 tons into the world’s largest and most liquid gold ETF on Friday.”
COMEX gold inventories have seen a sharp increase of more than 40% since Trump’s election victory in early November, reaching almost 24.6 million ounces.
This is the highest level recorded since November 2022, and the increase has been consistent over several weeks.
The increase corresponds to the equivalent of 230 tons of gold, with significant momentum in the last six weeks, increasing by 6.75 million ounces, according to Commerzbank.
Fritsch said:
The increase may have been in anticipation of import tariffs, even though gold was not explicitly mentioned as a possible target for tariffs.
“Some market participants may have hedged their gold requirements by buying gold futures, resulting in gold deliveries to the Comex to ensure physical delivery,” he added.
Technical forecast
According to FXstreet’s Mehta, gold prices are on course to retest their record highs touched in October.
“Gold price charted a symmetrical triangle breakout earlier this month while it holds comfortably above all the major daily simple moving averages (SMA), supporting the bullish case,” she said.
Prices are already well above the psychological barrier of $2,750 an ounce, with the next resistance lies at $2,790 per ounce.
“Given all the shenanigans taking place across FX due to President Trump’s tariff statements, it’s yet another testament to gold’s current resilience,” David Morrison, senior market analyst at Trade Nation, said.
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