Why Global Uncertainty and Trump's Tariffs Are Fueling Record-Breaking Demand?

Gold has reclaimed its place as the ultimate safe-haven asset, with demand from both institutional and retail investors driving prices to unprecedented highs. The precious metal recently hit a new all-time record of 2,942 dollars per troy ounce in Asian trading, reflecting an 11.2% increase since the start of 2025. This rapid rise is being fueled by a perfect storm of geopolitical tensions, economic instability, and protectionist trade policies introduced by U.S. President Donald Trump. As inflation rises and financial markets remain volatile, gold’s reputation as a reliable store of value continues to strengthen.

South Korea’s Wealthy Flock to Gold for Security

In South Korea, gold has become the preferred asset for wealthy investors seeking protection from economic uncertainty. According to the 2024 Korea Wealth Report by KB Financial Group, nearly 78% of wealthy South Koreans with assets exceeding 1 billion won ($750,000) have invested in gold and jewelry, making it the most popular alternative investment.

The trend is even more pronounced among South Korea's wealthiest individuals:

• 94% of high-net-worth individuals with over 10 billion won ($7.5 million) have holdings in gold and jewelry.
• 81.9% of those with assets between 5 billion and 10 billion won ($3.7 million to $7.5 million) are also invested in gold.
• Even among those with assets under 5 billion won ($3.7 million), a significant 66.5% have turned to gold.

The main reason behind this shift is gold’s stability and low risk. About 32.9% of respondents said they chose gold because of its low potential for loss, making it a safer option compared to more volatile investments like stocks and real estate. Gold bars remain the most popular choice, preferred by 65.1% of investors, followed by gold accounts (36.2%) and gold funds (26.3%).

This surge in demand has put significant pressure on the market. Major South Korean banks, including KB Kookmin Bank and Shinhan Bank, have already stopped selling 10-gram and 100-gram gold bars due to supply shortages. The Korea Minting and Security Printing Corporation also announced that it would halt the supply of gold bars to banks, reflecting the growing strain on the market.

Global Gold Demand Reaches New Heights

The growing appetite for gold is not limited to South Korea. In Indonesia, gold prices have risen sharply in line with global trends. In early February, gold was trading at 1.6 million rupiah ($97.8) per gram — up from 968,049 rupiah ($61.50) a year earlier, reflecting a 65% increase.

Indonesia’s largest state-owned mining company, PT Aneka Tambang (Antam), reported a 68% increase in gold sales in 2024, reaching 43,776 kilograms for the year. In the fourth quarter alone, Antam sold 15,209 kilograms of gold — more than double the 6,669 kilograms sold in the same period of 2023.

Antam’s spokesperson, Syarif Faisal, attributed the rising demand to a combination of global economic pressures and domestic uncertainty. “The increase in gold prices has been driven by global macroeconomic factors and geopolitical tensions,” Faisal explained. He expects this trend to continue throughout 2025 as global instability remains high.

Similar patterns are emerging across Asia and beyond. Inflation in the United States unexpectedly rose to 3% in January, fueling concerns that the Federal Reserve may need to adjust its interest rate policy. At the same time, Trump’s recent tariff announcements — including increased duties on imports from China, Mexico, and Canada — have added another layer of uncertainty to global markets.

This environment of heightened instability is driving investors toward gold as a hedge against inflation and currency volatility. Abdul Manap Pulungan from the Institute for Development of Economics and Finance (Indef) said that gold’s liquidity and stability make it an attractive long-term investment option, particularly in uncertain economic times.

Trump’s Tariff Strategy and Its Impact on Gold

Trump’s protectionist trade policies have played a significant role in fueling gold’s rally. Recent tariffs on aluminum and steel, along with broader trade restrictions targeting China, Canada, and Mexico, have rattled financial markets and pushed investors toward safe-haven assets.

Fund manager Hans Kwee emphasized that Trump’s aggressive trade policies have created an environment where gold thrives. “The threat of a prolonged trade war and rising inflationary pressures have made gold more appealing to both institutional and retail investors,” Kwee said. He added that emerging markets have seen increased capital outflows as a result of trade tensions, further boosting demand for gold.

Retail Investors Join the Gold Rush

The rise in gold prices has attracted a new generation of retail investors. In Indonesia, a 24-year-old investor named Satria reported a 7% return on his digital gold investment within a month. “It’s low-risk, and the trend is clearly upward,” he explained, adding that he plans to hold gold as a long-term asset.

In South Korea, more retail investors are turning to gold as well. A young investor named Annisa from Bandung said she plans to allocate 20% of her portfolio to gold, recognizing its potential to provide stability and balance against more volatile investments like stocks and cryptocurrencies. Meanwhile, another investor, Reny, who has been holding physical gold for over two years, reported a 30% increase in value. She noted gold’s liquidity as a key advantage: “Gold holds its value well, and it’s easy to sell when I need cash.”

Romanian Gold Market Surges

The gold rally has also spread to Europe. In Romania, Tavex Romania, one of the country’s largest gold dealers, reported a 60% increase in turnover in 2024, reaching 35 million euros. The company sold 450 kilograms of gold last year, up 25% from 2023.

Gold bars accounted for 80% of Tavex’s sales, while coins made up the remaining 20%. CEO Dimo Stefanov attributed this growth to rising concerns about fiscal instability and inflation in Romania. 80% of Tavex’s clients are individual investors, though some companies have also begun diversifying their reserves with gold holdings.

According to Victor Dima, Tavex Romania’s head of treasury, gold is becoming a preferred alternative to government bonds due to the country's unstable fiscal outlook. He expects gold demand in Romania to remain strong in 2025 as inflationary pressures and economic uncertainty persist.

Gold Price Forecast for 2025

Major financial institutions have revised their gold price forecasts upward in response to these trends. Goldman Sachs now projects that gold will reach 3,100 dollars per ounce by the end of 2025, reflecting an additional 8% increase from current levels. If central bank demand remains strong and trade tensions escalate, Goldman believes gold could rise as high as 3,300 dollars per ounce.

Key factors that could push gold higher include:

• Further trade war escalations under Trump’s administration.
• Stronger-than-expected central bank demand.
• Rising inflation and economic instability.
• Persistent weakness in the U.S. dollar.

Conversely, a slower pace of interest rate cuts by the Federal Reserve or improved market stability could put a temporary cap on gold’s rally. However, most analysts believe that geopolitical and economic uncertainty will keep gold prices elevated for the foreseeable future.

Conclusion: Gold’s Strength Shows No Signs of Slowing

Gold’s record-breaking rally reflects a seismic shift in investor behavior. With geopolitical tensions and trade wars showing no signs of resolution, gold has reclaimed its status as the ultimate safe-haven asset. Rising demand from central banks, growing interest among high-net-worth individuals, and increased retail participation are all driving this trend. As long as global uncertainty persists, gold’s upward trajectory appears firmly intact.