Amidst the inflation and interest rate anxiety of 2023 and 2024, debt dread of 2024, and tariff turmoil of 2025, it has been no secret that the worldโs largest commodity by market capitalization, gold, has been on an unstoppable rally.
The latest announcement, from both Washington, D.C., and Beijing, has yet again turbocharged the yellow metal.
Gold rocketed to a new all-time high (ATH) above $3,400 in the early hours of Monday, April 21.
How Trump is fueling the gold rally
The first piece of the puzzle can be found on Trump Mediaโs (NASDAQ: DJT) Truth Social, where President Donald Trump provided a list of what he considers โnon-tariff cheating.โ
As the list includes multiple widely employed practices, such as a value-added tax (VAT) and subsidizing certain sectors, the social media post can be seen as a harbinger of further aggressive economic measures.
How Xi is fueling the gold rally
Across the Pacific, China doubled down on its promise to fight the trade war to the end by pledging to retaliate against any countries that help the U.S. undermine its economy.
While many may take such a proclamation as belligerence on the part of the Peopleโs Republic, it is worth noting that the U.S. has, according to multiple reports ahead of the Easter weekend, been seeking partners to isolate the East Asian country more effectively.
Why gold remains attractive despite sky-high prices
The two revelations have furthered the prevailing uncertainty, as they simultaneously jeopardize the position of the dollar, price stability, and purchasing power in the U.S., global diplomatic relations, and the Chinese economy.
Gold has been performing exceptionally well since the beginning of the Russian invasion of Ukraine and the collective Westโs decision to freeze Russiaโs assets. The move was a stark signal of potential trouble for Americaโs opponents โ and many of its allies โ and caused central banks to go on a commodity buying spree.
Elsewhere, many have taken the East Asian countryโs feistiness as posturing, as the conventional wisdom dictates that a surplus country cannot win a trade war.
As China has become both the great factory and the great mine for many of the goods and materials the world needs for day-to-day operations, any issues in the nation can have dire effects globally.
Is China bound to lose the trade war?
Still, it is doubtful if China is truly at an oversized risk in the ongoing conflict, as the country, despite its reputation, is only slightly more dependent on exports than the U.S. Indeed, expressed as a share of GDP, exports accounted for 11% of Americaโs economy and 14% of Chinaโs in 2023, per the data Finbold retrieved from the Visual Capitalist on April 21, 2025.
Despite both superpowers being seemingly well-positioned for the trade war both the Trump and Xi administrations are determined to fight, the present and expected turmoil make the safe haven asset of gold a logical investment.
Gold outperforms stocks and Bitcoin
Investors have certainly reached the same conclusion. Although it has retraced somewhat from its latest high and is trading at $3,392, gold remains 29.26% up in 2025. For comparison, the benchmark S&P 500 index is 9.98% down year-to-date (YTD), and Bitcoin (BTC) โ once heralded as digital gold โ is 6.34% in the red in the same time frame.
Simultaneously, the worldโs largest commodity has also performed well over the last 12 months, rising 42.63%, and is up 100% over the last 5 years.
Lastly, most prominent analysts estimate that goldโs performance will remain strong through 2025. Peter Schiff, Gerald Celente, and Peter Grandich all estimate that the yellow metal has more room to rise, with $4,000 being a commonly cited target, as Finbold reported on April 18.
Similarly, Ed Yardeni set his gold price target for the current year at $4,000 and forecast $5,000 for 2026.
Leave a Comment