Gold Soars Over 2% as Markets Eye Fed, China Returns to the Scene
Tuesday, May 20th 2025
Gold surged to its highest level in two weeks on Tuesday, driven by a confluence of global factors — from renewed Chinese demand after a holiday break to rising fears of fresh U.S. tariffs. Meanwhile, investors worldwide are bracing for a pivotal decision from the Federal Reserve that could shape the next phase of the precious metal’s trajectory.
By early afternoon U.S. time, spot gold had climbed 2.4%, reaching $3,413.29 per ounce — a level not seen since April 22, when the metal peaked at a record $3,500.05. U.S. gold futures followed suit, settling 3% higher at $3,422.80.
Chinese Demand and Global Tariff Jitters Fuel the Rally
Markets in China, the world’s largest gold consumer, reopened after the May 1–5 Labor Day holiday, unleashing a wave of post-holiday buying. This fresh demand injection comes amid growing concern over looming U.S. tariffs — particularly those targeting pharmaceutical imports.
Adrian Ash, director of research at BullionVault, pointed to China’s intensified gold appetite and a global pivot away from U.S. dollar exposure: “China’s investment surge is playing a major role, along with persistent buying from central banks looking to reduce dependence on the dollar.”
This shift in strategy has bolstered gold’s role as a hedge against political and economic uncertainty — a role it’s leaned into heavily throughout 2025, reaching multiple record highs along the way.
Tariff Threats and a Weakening Dollar Support Prices
Adding more fuel to the fire, U.S. President Donald Trump recently announced a 100% tariff on foreign-made movies and hinted at similar measures for pharmaceutical imports in the coming weeks. The tariff talk has injected fresh volatility into the market, weakening the U.S. dollar and, in turn, making dollar-denominated gold more attractive to global investors.
TD Securities commodity strategist Daniel Ghali believes the current environment is fostering stronger gold demand on two fronts: “Speculators in China are becoming more active, and in the West, despite the rally, gold remains under-owned. That combination should continue to lift prices.” He even suggests that a move toward $4,000 an ounce is within the realm of possibility this year.
Fed Meeting in Focus: Will Rates Drop Soon?
All eyes now turn to the Federal Reserve’s policy meeting, with Chair Jerome Powell set to speak Wednesday. Investors are hoping for signals about the timing of possible interest rate cuts — a key driver for gold, which loses some of its luster when interest rates are high due to its lack of yield.
Should the Fed hint at easing policy, it could provide yet another leg up for gold’s rally, especially in an environment already rife with geopolitical and economic uncertainty.
A Broader Metals Rally
Gold wasn’t the only precious metal making gains. Spot silver advanced by 1.9%, reaching $33.10 per ounce. Platinum and palladium also posted solid performances, rising 2.4% and 3.1% to $982.52 and $971.27 respectively — reflecting broader bullish sentiment across the precious metals space.
