Gold prices are emerging as a haven during times of uncertainty, as US President Donald Trump’s successive trade policies have turned the global trade war into a tit-for-tat affair. “The combination of factors such as the weakening dollar and ongoing risk aversion are working in gold’s favor,” said Tim Waterer, chief market analyst at KCM Trade.

In a move that further escalates US-China trade tensions, Nvidia (NVDA) said yesterday that it will lose $5.5 billion after the US government restricted exports of its H20 artificial intelligence chip to China. Gold stands out as a highly sought-after asset in the face of this tariff uncertainty: Spot gold, which hit a low of $2,536 on November 14, shortly after US President Donald Trump’s election victory, has gained nearly 30% since then.

In some ways, gold is acting exactly as it should: It offers investors a safe haven from the chaos that has gripped many financial markets since Trump’s tariff announcements at his April 2 “Liberation Day” event. The imposition of large tariffs on most U.S. trading partners, allegedly in exchange for reciprocity, has reversed gains in stocks, bonds, and some commodities.

Trump’s 90-day tariff cut to 10% for all but China’s 145% tariff has largely failed to calm nerves and provide the stability that financial markets generally desire. This uncertainty has also raised some serious questions about the role of U.S. Treasuries as the ultimate safe-haven asset. Investors are also questioning whether that role has been undermined by Trump’s tariffs.

Moreover, the tension over the U.S. dollar as the global reserve currency and U.S. Treasuries as the ultimate safe-haven is undoubtedly a positive for gold. But the problem for gold is that Trump’s erratic and inconsistent trade and economic policies are likely to affect the yellow metal as much as any other asset. If Trump continues his trade war with China and increases tariffs of 10% on other countries after a 90-day hiatus, then gold is likely to continue to rise. But if a mutually beneficial compromise is reached with Beijing and other countries sign agreements with Trump that largely protect global trade, then the outlook for gold may not be so bright.

The dilemma is that predicting the likely outcome of Trump’s tariff war is a guessing game at best. Perhaps the safest assumption is that when the dust settles, the US will have the highest average tariff on imports since the 1930s. This is likely to cripple economic growth and accelerate inflation in many countries, especially the US. In that case, will gold continue to rise strongly, as many investment banks predict, as exemplified by Goldman Sachs’ April 11 hike of its 2025 target to $3,700 an ounce?

Or will fear trading fade and more traditional drivers of gold, such as central bank purchases and physical demand in China and India, return to play? “As long as there is uncertainty, gold will remain strong,” says Brian Lan, managing director of GoldSilver Central in Singapore.

“More trade policy uncertainty, more intransigence from the U.S. administration, tariffs on goods moving through third-party countries that are likely to disrupt global supply chains,” are the main factors supporting gold, according to Nicholas Frappella, global head of institutional markets at ABC Refinery.

Moreover, ANZ remains bullish on gold: “We believe that risk-off buying for gold has not yet picked up.” analysts raised their year-end gold price forecast to $3,600 per ounce and their six-month forecast to $3,500.

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