WASHINGTON, D.C.: Gold prices have shattered the US$3,000 per ounce barrier for the first time, driven by escalating geopolitical tensions and economic uncertainty.

The precious metal's record-breaking rally has been fueled by strong demand from central banks and investors looking for a safe-haven asset in volatile times.

Spot gold soared to an all-time high of $3,004.86 per ounce this week, marking its thirteenth record in 2025. Prices have already surged 14 percent this year after gaining 27 percent in 2024.

"With continued central bank buying, there are multiple factors driving demand. In a backdrop of geopolitical uncertainty and ongoing tariff changes, appetite for gold remains strong," said Standard Chartered analyst Suki Cooper.

Market turbulence has intensified under U.S. President Donald Trump's administration, with his aggressive tariff policies triggering retaliatory measures from China and Canada. As inflation fears mount and trade tensions escalate, investors are increasingly turning to gold as a hedge against uncertainty.

"With equity markets selling off and unpredictable political risks, we are starting to see a return of Western investors to gold, which could propel it to much higher levels," said John Ciampaglia, CEO of Sprott Asset Management.

Gold stocks in COMEX-approved warehouses have climbed to a record 40.56 million ounces, but inflows have slowed in recent weeks as traders reassess market conditions.

Expectations of interest rate cuts by the U.S. Federal Reserve are also supporting gold's rally. Traders now anticipate three quarter-point reductions this year, up from two just days ago. The Fed has already slashed rates by 100 basis points since September but paused in January. Markets now expect easing to resume in June.

"The inflation data is helping to give the market confidence that the easing cycle will continue, given concerns around inflation and growth," said Cooper.

Investor appetite for gold-backed exchange-traded funds (ETFs) is surging. The SPDR Gold Trust (GLD), the world's largest gold-backed ETF, saw its holdings rise to 907.82 metric tons on February 25, the highest level since August 2023.

"There will likely be increased flows into safe-haven assets like gold, especially as investors move away from equity growth stocks amid rising uncertainties and future concerns," said Dina Ting, Head of Global Index Portfolio Management at Franklin Templeton.

Strong central bank demand has added momentum to gold's rise. China's central bank resumed purchases in November 2024 after a six-month pause, marking four consecutive months of buying. Analysts believe ongoing stockpiling could push prices even higher.

"Central banks may ramp up gold purchases amid market uncertainties, not just to hedge against the U.S. dollar but to anchor their currencies to gold as well," said Ting.

With continued concerns over the U.S. budget deficit and global instability, some analysts predict gold could reach $3,500. Macquarie issued a note suggesting that gold may challenge new highs, while Goldman Sachs raised its year-end 2025 forecast to $3,100.

Central banks purchased over 1,000 tons of gold for the third consecutive year in 2024, with buying surging 54 percent in the final quarter of the year, according to the World Gold Council.