The price of gold surged to approximately $5,150 per troy ounce on Monday, marking its highest level in three weeks. This rally is being propelled by a confluence of geopolitical instability and unexpected U.S. trade policy developments, driving investors toward traditional safe-haven assets.
Economic Backdrop Provides Fundamental Support
Beyond immediate crises, underlying economic conditions are reinforcing gold’s appeal. Recent data shows U.S. GDP growth for the fourth quarter of 2025 slowed to just 1.4%, falling short of the anticipated 2.5%. Concurrently, the core PCE price index climbed to 3.0% in December. This combination of moderating growth and persistent inflation enhances the metal’s attractiveness as a portfolio hedge.
The Federal Reserve is maintaining its benchmark interest rate at 3.75%. Analysts at UBS project two further rate cuts of 25 basis points each by September, a move that would reduce the opportunity cost of holding the non-yielding precious metal.
Central bank demand remains a powerful structural driver. According to Goldman Sachs, net purchases by global central banks reached about 900 tonnes in 2025. In a historic shift not seen since 1996, these institutions now hold more gold than U.S. Treasury securities in their reserves.
U.S. Court Ruling Sparks Trade Policy Turmoil
A landmark Supreme Court decision has injected significant uncertainty into global trade. On Friday, the court ruled 6-3 that former President Trump’s tariff impositions were unlawful. Chief Justice John Roberts stated that tariffs based on the International Emergency Economic Powers Act violated the Constitution, affirming that the power to levy tariffs rests with Congress, not the President.
The response from Trump was swift. He first announced a global 10% tariff under Section 122 of the Trade Act on Friday, then raised it to the maximum allowable rate of 15% the following day. These new duties are set to take effect on Tuesday but will expire after approximately 150 days without congressional approval.
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The market impact is already materializing. India has postponed planned trade talks with Washington, while the European Parliament’s trade committee is considering suspending ratification of the EU-U.S. trade agreement. This legal and policy uncertainty is weighing heavily on financial markets.
Military Posturing Overshadows Iranian Nuclear Talks
Simultaneously, tensions in the Middle East are escalating, providing a classic catalyst for gold demand. New nuclear negotiations, mediated by Oman, are scheduled to begin in Geneva on Thursday. Iran’s Foreign Minister, Abbas Araghchi, stated on Sunday that a diplomatic solution was “within reach,” with Tehran working on a draft agreement.
However, this diplomatic effort is occurring against a backdrop of heightened military activity. The United States has stationed two aircraft carrier strike groups—the USS Abraham Lincoln and the USS Gerald Ford—along with dozens of fighter jets in the region. Trump remarked on Friday that he was “considering” limited military strikes against Iran. Iranian President Masoud Pezeshkian countered, declaring his country “will not yield.” The crisis had already pushed gold above $5,000 earlier in the week.
Bank Forecasts Point to Continued Strength
Major financial institutions see further potential for the precious metal. UBS has set a price target of $6,200 per ounce, citing ongoing geopolitical risks, the anticipated Fed pivot, and constrained supply. Goldman Sachs forecasts a year-end price of $5,400 in its base-case scenario. Analysts at J.P. Morgan see the price moving toward $5,000 by the fourth quarter, with longer-term potential to reach $6,000.
The coming days feature several critical events. The new 15% U.S. tariffs take effect Tuesday, the Iran negotiations commence Thursday, and the IAEA Board of Governors convenes in Vienna on March 2nd, where a new resolution concerning Iran is on the agenda. These three dates are likely to set the tone for gold’s trajectory in the near term.
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