The price of gold spiked last week on news that gold bars imported into the US will be subject to tariffs, but a subsequent clarification from President Trump caused a quick reversal.
Investing in gold has been a favoured retreat of befuddled investors trying to make sense of the various market ups and downs that Trump’s tariffs have provoked throughout the year so far. But even the safe haven asset isn’t immune to volatility.
Gold prices have risen 37% in the 12 months to August. Gold futures reached $3,500 on 8 August as US Customs officials ruled that imports of gold bullion could be subject to tariffs.
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But, on Monday 11 August, Trump posted on his Truth Social social media platform that “gold will not be tariffed”, causing gold prices to fall again.
“Reports of imminent tariffs on 1 kilo gold bars destined for the US, followed by ‘clarification’ which declared that tariffs would not be applied, created a spike in gold prices followed by a reversal,” said Rick Kanda, managing director at The Gold Bullion Company.
Spot gold prices pushed above the $3,400 level, but never pushed higher before Trump’s clarification. Gold’s all-time high price remains the $3,500 mark it reached in April at the height of the tariff tension.
Has the gold rally lost its shine?
Which factors are pushing the gold price up?
Gold prices have been on the rise for over a year, with different factors coming to the fore throughout that time.
The initial catalyst for the gold price rally was an increase in central bank gold purchases.
"From a big picture standpoint, central bank buying of gold has increased over the last few years," says Paul Syms, head of EMEA ETF fixed income and commodity product management at Invesco, "particularly following the start of the Russia-Ukraine conflict which saw a shift in reserve allocation away from the US Dollar and US Treasuries."
Closely tied to this is geopolitical uncertainty.
Gold is seen as a safe haven asset, and in the wake of wars in Ukraine and the Middle East in particular, investors have joined central banks in buying up gold to protect them at risk.
During 2025, the greatest impetus behind rising gold prices has been the chaos caused by Trump’s tariff regime.
This goes hand in hand with a weakening dollar. Gold is seen by many investors as a means of hedging against inflation, and given it is usually priced in dollars, a weakening dollar has been favourable to gold prices.
Analysis from the World Gold Council attributed a slight rise in gold prices during July to increased inflation expectations and tariff tensions.
Is the gold rally running out of momentum?
Gold prices have steadied of late. Rapid upwards price momentum over the last 12 months has relented, with gold trading within a relatively narrow range (approximately $3,200-$3,450) since mid-April.
Given the amount of uncertainty at present, gold investors aren’t reacting strongly in either direction to news events.
News that Trump and Russian president Vladimir Putin will meet on Friday, 15 August, to discuss a peace deal in Ukraine has also tempered demand for gold.
“Positive news relating to Ukraine should lower gold prices as safe-haven demand decreases,” said Kanda.
The gold price rally may not be over yet, though, at least for UK investors. “Continuing volatility in the USD/GBP exchange rates will likely cause further spikes and reversals in the UK gold price in the coming weeks and months,” says Kanda.
Measured in sterling, gold prices have gained 28.7% over the past year and 6.1% over the past month.
While acknowledging that forecasting future movements is difficult, Syms believes that the backdrop for gold appears "supportive".
"Central banks are continuing to buy gold," he says, "and investor sentiment has become more positive, with investors appearing to buy dips rather than sell strength.
"Additionally, with rates cuts likely, US Treasury yields and the Dollar could fall, both of which tend to be supportive for gold."
How to gain exposure to gold prices
There are three main ways to invest in gold. The first one is investing in the metal itself through a financial contract, such as an exchange-traded product. See our article on the best gold ETFs for more information.
You can also get indirect exposure by investing in the miners that dig gold out of the ground. This can be done by investing directly in their shares, or by buying a gold fund or investment trust. Note that gold miners don’t always rise with the gold price, as other company-specific factors are at play.
Lastly, you can buy physical gold bars or gold coins.
In terms of how much gold to hold in a portfolio, Tom Stevenson, investment director at Fidelity International, suggests around 5-10% is a good amount – which is about the same as you might hold in cash.
“The two offer insurance and dry powder to complement the growth and stability of the shares and bonds that make up the bulk of a balanced portfolio,” he comments.
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