Gold Hits Fresh All-Time High Amid Recession Fears, Powell Comments On Tariff Concerns

 

Gold Hits New All-Time High Above $3,300/ozt on Recession Fears, Flight to Safe Havens

(Bullion News Network) – Gold set another all-time high on Wednesday following two subdued trading sessions to begin the week. The spot price of gold climbed consistently beginning with the futures market open yesterday evening, pushing the precious metal to a new all-time high above $3,300 per troy ounce. This price run also comes on the heels of Goldman Sachs’ decision to revise its 2025 gold price forecast to $3,700/ozt, citing rising central bank demand and recession fears. Gold peaked at just over $3,350 per troy ounce by market close, with very little downward pressure during the day during the precious metal’s run. Gold’s total gains on the day amount to over $100/ozt. 

Silver prices also climbed amid the spike in safe haven demand, adding about $0.30/ozt to the metal’s spot price. The lopsided price action strongly favored gold, driving the gold-silver ratio one point higher to 101.79:1. This month is only the second time in the history of tracking that the gold-silver ratio topped 100:1, with the other time occurring in mid-2020 at the height of the COVID-19 pandemic. 

Market uncertainty surrounding President Donald Trump’s tariffs, as well as the ongoing trade war between the U.S. and China, continue to motivate safe haven demand for gold. The U.S.-China trade war escalated this week, with the two largest economies in the world trading blows in what economists are calling one of the most significant trade wars in modern history. Concerns that the trade war will lead to a recession in the U.S. drove stocks sharply lower on Wednesday. The Dow lost around 700 points today, and the Nasdaq dropped 3% in an apparent tech stock sell-off.

Today’s stock dip was accelerated by comments by Federal Reserve Chair Jerome Powell, who spoke to economists and business leaders at the Economic Club of Chicago. In the speech, Chair Powell expressed concerns that the White House’s tariff plans could pose a significant obstacle as the Fed works towards its dual mandate of lowering prices and maximizing employment. The President’s tariffs could pose a “challenging scenario,” Powell says, if the ongoing trade war leads to an economic slowdown. Notably, Powell also emphasized the possibility that President Trump’s policies could put the Fed’s objectives “in tension” with one another.

In that case, Powell explained, the Federal Reserve would be forced to consider “how far the economy is from each goal” and the “potentially different time horizons” of each dual mandate objective. Wall Street dropped and safe haven assets jumped during Chair Powell’s speech, which seems to confirm that the FOMC is concerned about how the White House’s economic policies will impact the state of the American economy. 

The implied market probability of an interest rate cut at the Federal Reserve’s May meeting remained largely unchanged, though. CME FedWatch now projects a 16.1% probability that the FOMC will vote to cut rates, down from 18.6% yesterday, 20.4% last week, and 27.7% one month ago. In 2024, speculation surrounding interest rate cuts was a major factor behind gold’s historic price run. Investors expect gold’s bullish run to accelerate if these much-anticipated 2025 rate cuts become more likely.