The recent decision by the United States government to impose a 25% tariff on all imported steel and aluminum has sent ripples through global financial markets, increasing uncertainty and driving gold prices to unprecedented heightsAs of the latest reports, the price of spot gold surged to $2,930 per ounce, breaking historical records following a notable increase of nearly 1.7% the previous dayMeanwhile, gold futures lingered around $2,955 per ounce, reflecting the growing demand for this precious metal.

On February 10, an executive order was signed, officially enacting the new tariffs with a clear message: there would be no exceptions or exemptions for this policyThe implications of this move extend beyond steel and aluminum; the administration has indicated a willingness to consider tariffs on other sectors, including automotive, semiconductor, and pharmaceutical industries.

In light of escalating trade tensions and geopolitical uncertainties, gold is increasingly being recognized as a safe haven assetThis year alone has seen a remarkable 11% increase in gold prices, further accentuating its status as a reliable store of value amid market volatility.

Richard Franulovich, an analyst at Westpac Bank, pointed out that the unpredictability of U.S. policies is rising, impacting both allies and adversaries alike with the imposition of tariffsSuch dynamics have substantially heightened gold's appeal as a risk-averse investmentInvestors are undoubtedly seeking refuge in gold as a response, given the significant risks and uncertainties prevailing in global financial markets.

Additionally, market participants are grappling with potential ramifications on U.S. monetary policy should the new government's strategies reignite inflation while dampening economic growthShould the Federal Reserve choose to maintain high interest rates over an extended period, this could exert further pressure on gold investment demand.

Federal Reserve Chair Jerome Powell is scheduled to testify before the Senate and House committees on February 14 and 15 as part of the semiannual monetary policy report

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His statements during these hearings may provide valuable insights into the Fed's interest rate trajectory moving forward.

Investors are keenly watching Powell's perspective on economic outlooks, inflation targets, and the overall monetary policy stanceIn January, Powell indicated that the Federal Reserve was in no rush to enact further rate cutsAnalysts speculate that Powell may highlight the resilience of the economy as a crucial factor for the Fed's cautious approachGiven the current robust state of the U.S. economy, Fed officials have the latitude to evaluate how the new administration's changes in trade, immigration, and tax policies may influence the economic landscape.

The year 2024 has set an extraordinary pace for gold, with prices reaching an unparalleled frequency of highs—over 40 timesThe World Gold Council has published its Global Gold Demand Trends report, revealing that sustained strong purchases of gold by central banks, coupled with rising investment demand, have contributed to a record annual demand totaling 4,975 tons globally, marking a historic peakThe soaring prices of gold and demand figures pushed the total global gold market value for 2024 to an impressive $382 billion.

Central banks have persistently played a crucial role in driving gold purchasesAccording to data, global central bank purchases of gold exceeded 1,000 tons for the third consecutive year in 2024. Furthermore, investment demand for gold is projected to experience a substantial growth of 25% year-over-year, reaching 1,180 tons and achieving the highest levels in four years.

Louise Street, a senior market analyst at the World Gold Council, elaborated that the frequent highs in gold prices have brought the precious metal back into the global limelightShe anticipates that in 2025, central banks will continue to be the dominant force in gold purchases, while investment demand via gold ETFs will play a vital role in sustaining gold demand. "Geopolitical tensions and macroeconomic uncertainties will be the focal point in 2025, thereby underpinning gold's role as a hedge against risks and a means of preserving wealth," she emphasized.

Looking forward, many institutions remain optimistic regarding gold's market trajectory

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