Market and global trade volatility caused by tariffs has driven demand for gold

According to Shaokai Fan, Head of Asia-Pacific (ex-China) & Global Head of Central Banks at the World Gold Council, market and global trade volatility caused by tariffs has driven demand for gold, prompting both organization investors and individuals to turn to gold as a hedge against risks.

In early 2025, future gold prices on the COMEX (New York Mercantile Exchange) began to diverge from gold prices in London due to a significant increase in physical gold demand in the US, driven by concerns over potential tariffs.

This has led to a price disparity between the US gold market and global gold prices, while also attracting a large inflow of physical gold into the US. Although this situation has since stabilized, concerns about the impact of tariffs on the available gold supply in the US remain.

Additionally, fluctuations in the US exchange rate and government bond yields play a crucial role in gold prices. The weaker US dollar is a key factor influencing gold’s yield, alongside rising geopolitical risks and interest rate cuts.

The weaker US dollar, whether due to lower interest rates or policy uncertainty, makes gold more attractive to investors as a store of value. Typically, the weaker dollar and lower bond yields are beneficial for gold prices.

The expert also noted that in times of economic uncertainty, gold is often considered a safe-haven asset. Gold holds a significant and culturally embedded role in Vietnam, and domestic demand for gold is likely to continue increasing as consumers seek stability amid global economic fluctuations. This behavior aligns with global trends, where geopolitical and economic uncertainties drive demand for gold as a stable asset.

“In Vietnam, while rising gold prices may reduce demand for gold jewelry, investment demand for gold may continue to grow as people seek protection against inflation and market instability,” said Shaokai Fan.

Gold is a globally traded asset, with its prices determined by global events and economic forces. Vietnamese investors should carefully study the factors influencing gold prices and assess which gold-related financial instruments are most suitable for them.

Gold can play a role in many investment portfolios as a way to hedge against risks in uncertain times and enhance asset diversification. Gold has long demonstrated strong performance during periods of instability. In today’s highly uncertain global environment, the World Gold Council believes that all investors should consider the value gold can bring to their portfolios.

Shaokai Fan also highlighted the resurgence of gold ETFs in 2024, with inflows reaching US$9.4 billion by February 2025, reflecting strong investor interest. Gold ETFs made an impressive comeback in 2024, and this trend may continue into 2025 due to lower interest rates, market volatility, and ongoing concerns about policy direction.