Gold Hits Record Highs Amid Trade War Fears and Nvidia Shock
Tuesday, May 20th 2025
In a dramatic turn on Wednesday, gold prices surged to an all-time high, underscoring investor unease as financial markets reacted to growing U.S.-China tensions and a stark earnings warning from Nvidia. The chipmaker’s announcement that it could lose $5 billion in revenue due to escalating geopolitical conflict sent stocks into a tailspin — and investors running for cover.
Safe-Haven Rush Lifts Gold to $3,350
As equities fell, gold futures soared over 3%, peaking near $3,350 per ounce — a new record. This move caps off a stunning 25% rally for gold so far this year, as demand for safe-haven assets surges amid economic and political uncertainty.
Gold exchange-traded funds (ETFs) have been magnets for capital, seeing net inflows in nearly every week of Q1. The demand surge hit highs not seen since 2022, particularly in February and March. And the trend shows no signs of slowing: President Trump’s recent announcement of sweeping “reciprocal” tariffs is expected to keep appetite for gold elevated into April.
Fund Managers Turn to Gold Over Tech
The sentiment shift among professional investors is striking. For the first time in two years, Bank of America’s Global Fund Manager Survey showed that “long gold” had overtaken the “Magnificent Seven” tech stocks as the market’s most crowded trade. Nearly half (49%) of respondents saw gold as the dominant position, with 42% predicting it would be 2025’s best-performing asset.
UBS analysts captured the mood in a recent note: “In this environment of escalating tariff uncertainty, slower global growth, persistent inflation, and growing geopolitical risks, gold has become an increasingly attractive diversifier away from U.S. assets and the dollar.”
What’s Fueling the Rally?
The World Gold Council points to several long-term factors driving gold’s historic ascent:
- Central Bank Demand: Institutional buying by central banks remains a powerful tailwind, and there’s little indication that this trend is slowing.
- Underexposure Among Investors: Gold ETFs currently make up just 1.6% of all U.S. ETF assets — far below their 7.6% share during the 2011 gold bull market.
- Continued Global Uncertainty: With the White House’s 90-day tariff truce nearing its expiration, geopolitical tensions and economic headwinds are likely to stay elevated.
What Could Derail the Momentum?
Despite the bullish outlook, there are a few clouds on the horizon. Rising prices may eventually cool investor enthusiasm or limit central bank purchases. Analysts also warn of potential liquidity crunches: in times of broader financial stress, even gold can be sold off to cover margin calls.
Another possible turning point? A diplomatic breakthrough on trade. If the U.S. and China reach meaningful agreements, it could restore investor confidence and redirect flows back into riskier assets — sapping some of gold’s current momentum.
Gold Miners Ride the Wave
Even with past concerns about cost overruns and inefficiencies, analysts remain optimistic about gold mining stocks. On Wednesday, major producers like Newmont (NEM) and Barrick Gold (GOLD) rallied alongside the precious metal, benefiting from renewed investor interest in the sector.
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