Gold prices soar to record high of $3,167 per ounce on sweeping tariffs; what lies ahead?

Gold prices continued to rise higher on Thursday morning after the Trump administration announced sweeping reciprocal tariffs on its trading partners. Following the announcement, global markets tumbled as Japanese, Chineses markets opened lower on Thursday with up to 3% losses. Similarly, Indian markets are also expected to open lower by 250 points.

Countries like China, Japan, the European Union, Korea and other small trading partners imposed reciprocal tariffs of up to as high as 49%. On the other hand, the UK and Brazil were the only two trading partners with the lowest 10% tariff rate. Apart from that, Canada, Mexico and Russia were exempted from the list of nations for reciprocal tariffs.

US President Donald Trump announced a 26% discounted reciprocal tariff on India, half of the 52% levies imposed by India on American goods, as he described India as very, very tough.

Chinese counterparts vowed to retaliate further with economic measures and in discussion with European partners to strike a trade deal.

Will the gold rally continue?

Gold prices have rallied over 20% in 2025 on a year-to-date basis amid rising uncertainties on global economic growth. Thursday’s rise in gold prices was primarily driven by more than expected tariff rates on major trading partners of the US.

Experts believe these high tariff rates are expected to have a double blow to the US economy. First, it is expected to keep the inflation rates high as imports get costlier due to high tariffs. Second, it is also expected to weaken the economic growth prospects for the economy. Both these parameters are positive for high gold prices.

This also indicates, the treasury yields to go lower, shifting the flow to havens like gold, and a drop in the dollar demand could also increase inflow to other haven yields like Japan, EU and more.

Apart from this lower interest rate scenario, strong demand from central banks, strong inflow in the ETFs are also contributing factors to the rising gold prices. Experts believe, amid a stagflation like scenario in the US economy, the US equities are expected to take a back seat and safe havens like gold are expected to see high demand.