Gold futures surge to record as Trump tariffs blindside 'trusted' market

Price of the metal is up 30% in 2025 and nearly 40% from a year ago

Gold bars at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland. One-kilogramme gold bars comprise Switzerland's biggest exports of gold to the US. ReutersShow less

Gold futures hit another record on Friday, reinforcing its safe-haven appeal at a time of market uncertainty over US President Donald Trump's sweeping tariffs and his surprise move to tax bullion.

December futures for the precious metal surged to $3,534.10 an ounce in intraday trading. It trimmed gains to settle at $3,398.58, a 1 per cent weekly gain.

That puts gold's gains at about 30 per cent in 2025 and nearly 40 per cent from 12 months ago.

“Tariffs on gold bars? It’s absurd. We’re talking about a market that’s supposed to be one of the cleanest, most efficient and most trusted in global finance,” said Nigel Green, chief executive of global financial advisory deVere Group.

“Instead, we now have price distortions, logistical headaches, and an open invitation for arbitrage – all created by a piece of paper.”

What's driving gold up?

That sharp shift in gold, alongside other key metals silver, platinum and copper, are being driven by US tariff expectations and tariff-related hedging activity in futures, said Ole Hansen, head of commodity strategy at Danish lender Saxo Bank.

“We saw similar dislocations during Covid, when the transatlantic bullion supply chain briefly stalled, and again earlier this year amid speculation that Trump’s tariffs might include precious metals,” he said.

“For now, it’s worth watching whether another 'Taco moment' will emerge. If not, the spread may need to settle at a new level that reflects the tariff landscape,” he added, referring to the “Trump Always Chickens Out” market description of the President flip-flopping on his decisions.

But the biggest blow to gold was, as first reported by the Financial Times, Washington's decision to impose duties on 1kg and 1oz bars – a category long assumed to be exempt from trade levies and despite the White House indicating in April, when Mr Trump announced his so-called Liberation Day tariffs, that gold would be spared from the sweeping duties.

Crucially, 1kg bars comprise Switzerland's biggest exports of gold to the world's largest economy.

The sudden ruling “detonated decades of convention, setting the stage for a seismic redrawing of global gold flows”, Mr Green said.

In particular, the decision landed a huge blow on Switzerland, the world’s largest exporter of refined gold, and which is already facing a 39 per cent duty on other US imports.

“We believe gold trade flows should be excluded from the current account balance, as they occasionally greatly distort the underlying fundamental dynamics for technical reasons, unrelated to the economic relations between the US and Switzerland,” said Kiran Kowshik and Filippo Pallotti, analysts at Swiss bank Lombard Odier.

Also, it created a dramatic pricing split, as while London spot prices remained steady, US futures jumped, commanding a premium of more than $100 an ounce.

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That gap is also straining the role of New York’s Comex – the world's largest futures exchange – as the global hedging benchmark, threatening to divert trade away from the US, with London emerging as a possible beneficiary, Mr Green said.

“Futures surging into uncharted territory because one customs ruling turned the global gold plumbing upside down. This is what happens when political theatre trumps market logic,” he added.

Where is gold headed?

In addition to the tariffs, persistent central bank demand, geopolitical tension, sanctions, trade friction and further US dollar weakness are expected to continue supporting gold prices in the second half of the year, analysts have said.

Before Friday's spike, multiple research, including from the World Gold Council, Citi Research, Refinitiv and Byblos Research, have pegged gold to average $3,400 in the third quarter of 2025.

Strong central bank buying of 900 tonnes in 2025 and robust ETF inflows of 552 tonnes in the first quarter of 2025 reflect sustained demand for gold, while a softer US dollar and anticipated Federal Reserve rate cuts enhance the precious metal’s attractiveness as an inflation hedge, according to Aaron Hill, chief analyst at forex trading broker FP Market.

Stock market reaction

Global stock markets were mixed at the close on Friday, with Wall Street clinching a third winning week in a row after days of uncertain trade, amid higher technology shares and investor optimism on interest rate cuts.

Apple, which Mr Trump on Wednesday said would invest an additional $100 billion into US manufacturing, jumped 4.2 per cent on Friday for a 13.3 per cent weekly gain.

The Dow Jones Industrial Average settled 0.47 per cent higher, the S&P 500 added 0.78 per cent and the tech-heavy Nasdaq Composite rose 0.98 per cent for its 18th record closing high in 2025.

In Europe, London's FTSE 100 was nearly flat on investor concern over the Bank of England's split rate decision, although strong corporate earnings softened the blow.

Paris' CAC 40 added 0.4 per cent, while Frankfurt's DAX inched down 0.1 per cent.

The Firefly Aerospace Blue Ghost lander is seen during the Texas-based company's initial public offering at the Nasdaq MarketSite in New York on Thursday. Bloomberg

Earlier in Asia, Tokyo's Nikkei 225 closed 1.9 per cent higher after a Japanese government official said the White House would make revisions to its stacked tariffs on the world's fourth-biggest economy.

The US and Japan struck a tariff deal on July 22, which Mr Trump touted as “the largest trade deal in history”, although Tokyo did not endorse it at the time.

Hong Kong's Hang Seng Index settled 0.9 per cent lower, while the Shanghai Composite inched down 0.1 per cent. The US and China are in discussions to extend their 90-day truce over tariff issues.

Oil prices, meanwhile, recorded a sharp weekly loss on Friday amid the latest round of US tariffs and anticipated US-Russia talks on a Ukraine war ceasefire.

Brent settled 0.24 per cent higher at $66.59 a barrel, while West Texas Intermediate was flat at $63.88 a barrel, dragging them to weekly losses of 4.4 per cent and more than 5 per cent, respectively. Both benchmarks are now down nearly 11 per cent in 2025.