Gold prices soar as Trump’s tariff battle escalates

In January 2025, the U.S. welcomed Donald Trump as its 47th president. True to his promises, he announced sweeping tariffs on all steel and aluminum imports starting March 12, triggering global trade tensions. Mexico, Canada, and the EU condemned the move, while Japan and Australia sought exemptions.

As uncertainty rises, investors are turning to gold, driving prices higher. In India, as of February 12, 24-carat gold stands at ₹85,090 per 10 grams, while 22-carat is ₹83,050. What’s fueling this surge, and what lies ahead? Let’s explore the key factors shaping the gold market.

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Tariffs have been a cornerstone of Donald Trump’s economic strategy since his presidential campaign. He has consistently argued that imposing import duties on America’s main trade partners would bolster domestic manufacturing, safeguard jobs, increase tax revenue, and drive economic growth. However, these protectionist measures have led to escalating trade tensions with key nations, including Canada, Mexico, and China.

The Heightened Tariff Battle  

Trump’s trade war intensified with new 25% tariffs on steel and aluminium imports. Canada and Mexico responded with retaliatory tariffs, while China signaled countermeasures against Trump’s policies. The US President also claimed that tariffs were necessary to combat illegal drug trafficking and immigration.

Under these new trade restrictions, tariffs of 25% were levied on imports from Canada and Mexico, while a 10% duty was imposed on Chinese goods. These actions led to global economic uncertainty, affecting multiple sectors and financial markets.

Soaring Gold Prices Amid Tariff Tensions  

One of the most immediate consequences of Trump’s tariff policies has been the surge in gold prices. As trade war fears escalated, investors flocked to the precious metal, traditionally seen as a safe-haven asset in times of economic turbulence.

Spot gold surged to a peak of US$2,942.70 per ounce during Asian trading hours before dipping 0.1% to US$2,904.59 as of 11:18 GMT. As of 12^th February, the gold prices per 10 gram stand at Rs 85,090 for 24 carat and Rs 83,050 for 22 carat, according to India Bullion and Jewellers Association.

Marking its eighth record high of 2025, bullion is edging closer to the US$3,000 milestone as investors react to mounting uncertainties surrounding U.S. trade policies.

Gold rate in India for past 10 days

Date	Standard Gold Rate (22 K)	Pure Gold Rate (24 K)
Feb 11, 2025	Rs 81,350	Rs 85,420
Feb 10, 2025	Rs 80,550	Rs 84,580
Feb 9, 2025	Rs 80,250	Rs 84,260
Feb 8, 2025	Rs 80,250	Rs 84,260
Feb 7, 2025	Rs 80,100	Rs 84,110
Feb 6, 2025	Rs 79,300	Rs 83,270
Feb 5, 2025	Rs 79,850	Rs 83,840
Feb 4, 2025	Rs 77,850	Rs 81,740
Feb 3, 2025	Rs 77,850	Rs 81,740

On the Multi Commodity Exchange (MCX), gold prices rose 0.57%, reaching ₹85,371 per 10 grams.

Amid fluctuating trends, Vipul Shah, Chairman, Gems and Jewellery Export Promotion Council (GJEPC) says-

“The surge in gold prices in India can be attributed to multiple global factors, including the introduction of tariffs by U.S. President Donald Trump, escalating geopolitical tensions between Gaza-Israel and Ukraine-Russia, as well as increased gold purchases by central banks worldwide. These dynamics have fueled a sharp rise in demand, impacting prices significantly. However, looking ahead, we anticipate a correction in the gold market, with prices expected to ease from the current US$ 830 to around US$ 680 per 10 grams for 24 carat gold“

24K Gold price trend in India, in Rs per 10 gram*, Source: moneycontrol.com

Why Are Gold Prices Rising?

Several key factors have contributed to the ongoing rally in gold prices:

1. Safe-Haven Demand Due to US Tariffs: The recent statement by former U.S. President Donald Trump regarding potential tariffs on countries such as Mexico, China, and BRICS nations has heightened concerns about trade wars. Trump announced a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods. While the tariffs on Canada and Mexico are currently on hold, those on China remain in place. In response, China has imposed tariffs on American products, including coal, crude oil, and liquefied natural gas (LNG), further fueling global economic uncertainty. As a result, investors are turning to gold as a hedge against economic instability.
2. Geopolitical Tensions in the Middle East: The Israel-Hamas conflict escalated as Hamas suspended hostage releases, citing ceasefire violations. This added to global uncertainty, driving investors toward gold.
3. China’s Central Bank Boosting Gold Reserves: The People’s Bank of China (PBoC) has been steadily increasing its gold holdings for three consecutive months. Central bank purchases have added momentum to the gold price rally.
4. Strength of the US Dollar: The US dollar index surged past 108, making gold more expensive for buyers using other currencies. This slowed further price gains but did not halt the overall upward trend.

Trump’s tariff policies have intensified global trade tensions, creating uncertainty across financial markets. While the U.S. administration defends tariffs as a measure to protect domestic industries, they have also led to soaring commodity prices, particularly gold. As trade disputes persist and geopolitical risks escalate, gold remains a preferred asset for investors seeking financial stability.

Despite the volatility, India’s gold demand is expected to remain strong. The World Gold Council (WGC) projects demand to reach 700-800 tonnes in 2025, following a robust 802.8 tonnes in 2024. With rising interest in gold ETFs and e-commerce purchases, India’s gold market continues to thrive, reaffirming gold’s role as both an investment and a hedge against economic uncertainty.