Gold prices surged past the $2,850 mark amid cautious market sentiment, reflecting the current volatility and investor concern over geopolitical tensions. On Monday morning, March 3, 2025, gold trading opened strongly, reaching $2,870 per ounce during trading hours across Asia, driven by increasing demand for safe-haven investments.
The soaring prices of gold (XAU/USD) were predominantly influenced by geopolitical unrest, particularly the escalation of tensions between Russia and Ukraine. Investors seem increasingly risk-averse as uncertainties linger, fueling the movement of capital toward gold. Recent events have underscored this sentiment, as major economic indicators and political developments capture the focus of market participants.
Adding to the market dynamic, anticipation surrounding the U.S. Purchasing Managers' Index (PMI) for February is high, as its release later today could significantly impact expectations surrounding Federal Reserve monetary policy and, indirectly, gold prices.
According to Russian state news agency RIA, there was a fire at an oil refinery located in Ufa, Russia. While local officials claimed there was no threat to nearby residents, the cause of the fire remains unknown, contributing to the backdrop of uncertainty influencing investor decisions.
Meanwhile, the former U.S. President Donald Trump made headlines over the weekend by criticizing Ukrainian President Volodymyr Zelenskyy for perceived disrespect and canceling a mineral agreement—a deal aimed at advancing Ukraine's efforts to resolve its conflict with Russia. Such commentary has heightened fears surrounding future Russian-Ukrainian tensions, triggering greater interest in gold as market participants seek to hedge against potential fallout.
There are underlying pressures holding back gold's recent upward momentum, mainly stemming from the strength of the U.S. dollar. Newly released inflation data aligns with market expectations, indicating the Federal Reserve might maintain its cautious stance on interest rate cuts. Specifically, the Personal Consumption Expenditures (PCE) index for January showed a 2.5% year-over-year increase, down slightly from December's 2.6%. Meanwhile, the core PCE, which excludes food and energy, rose by 2.6%, down from 2.9% previously. These figures suggest tapering inflationary pressures, but not enough to spur the Fed to expedite monetary policy easing.
The dynamics over the past weeks indicate changing attitudes among Asian investors as they navigate the global economic upheaval. Instead of continuing to buy, many have opted to pause trading or shift toward selling gold to capitalize on the high record prices. Long regarded as a safe haven during unstable economic periods, gold's appeal has been heightened by the volatility over U.S. tax policy and persistent geopolitical tensions.
Padraig Seif, co-founder of Precious Metals Asia, shared insights with the media, remarking, "We are certainly observing some investors selling to take profits. Investment-heavy groups, such as family businesses, are standing back from the market and awaiting clearer signals about gold's price direction." On March 2, gold prices on Kitco were reported at $2,857.1 per ounce, which reflects a decrease of $19.5 from the previous session. Just days earlier, on February 24, gold temporarily peaked at $2,953 per ounce, setting new records during intense trading sessions.
This price surge since Trump's inauguration at the end of January marks over 5% growth for the precious metal. Nevertheless, discussions around whether this peak has been reached continue. Speculations are tied to recent shifts stemming from the U.S. administration’s new trade policies. Trump’s 25% tariffs on imports from Canada and Mexico, accompanied by 10% tariffs on goods from China, have instilled anxiety across global markets. Although some products received temporary exemptions of 30 days, the uncertainty these actions have introduced remains palpable.
Simultaneously, geopolitical tensions, including the protracted Russia-Ukraine conflict and the Israel-Gaza situation, have collectively supported high gold prices over the past year. Notably, the growth in demand for gold from ETF funds across the United States has also boosted this upward trend.
The Asian gold market, long the world’s largest consumer region primarily driven by jewelry sales, appears to be shifting, with demand noticeably muted at the start of 2025. Retail customers responding to rising prices have increased their gold sells, highlighting another trend. Concurrently, the practice of pawning gold to secure loans is also seeing significant upticks as market forces shift.
Gnanasekar Thiagarajan, founder of Commtrendz Research, noted, "There’s been considerable gold-backed borrowing occurring recently, especially amid weak stock market performance owing to global trade issues." Financial professionals predict U.S. tariffs could compel certain Asian nations to devalue their currencies against the dollar, promoting more investment flows toward gold to safeguard asset value.
Even without U.S. tariff policies, continued geopolitical disputes worldwide are likely to bolster gold as the favored safe-haven investment. Optimism about another potential gold price upswing persists. Yet, analysts caution this growth could soften over time amid shifts shaped by monetary and trade policies. Some experts estimate the risk of economic recession within the U.S. due to the potency of prolonged trade disputes and political unrest.
James Ooi, market strategist at Tiger Brokers, shared insights about investor behavior: "If investors are concerned about recession risk or potential market crash, they will likely keep directing funds toward gold. Nonetheless, the large-scale shift of investments from equities to gold remains less probable as many still hold out hope for economic recovery."
To summarize, as global economic volatility continues to shape the gold trading environment, Asian investors are exercising increased caution. A preference for profit-taking, pawning, and gold storage is becoming more pronounced, with new investment demand showing signs of weakness. These behaviors will likely impact precious metals markets going forward, especially as political and economic uncertainties loom large.
Domestically, the gold market has experienced price adjustments following previous surges. Mid-February 2025 saw local gold prices spike above 93 million VND per tael, but recently, prices have corrected themselves. Current listings indicate SJC gold chunk prices have decreased approximately 1.2 million VND per tael over the past week, currently priced at 88.5 million VND per tael for buying and 90.5 million VND per tael for selling. The spread between buying and selling of SJC gold remains approximately 2 million VND per tael, indicating precaution among dealers amid price volatility, which has contributed to hesitancy among investors.
Market experts recommend vigilance, urging investors to closely monitor market trends and carefully evaluate any transactions, particularly as gold prices remain highly variable.