Gold price to extend 6-week rally amid trade tensions and central bank buying
One of the key drivers of gold’s rally is China’s ongoing accumulation of the metal
Gold price relentless rally in 2025 continues, with prices reaching a fresh all-time high of $2,890 per ounce on Monday, surpassing last week’s record of $2,888.
The metal is now up over 10% this year, marking six consecutive weeks of gains and showing strong momentum for a seventh. Despite the daily RSI indicating overbought conditions, gold’s upward trajectory remains intact, with the $2,900 psychological level just 0.3% away.
One of the key drivers of gold’s rally is China’s ongoing accumulation of the metal. The People’s Bank of China (PBOC) increased its gold reserves for a third consecutive month in January, raising holdings to 73.45 million fine troy ounces from 73.29 million a month earlier. Given China’s status as the world’s largest gold consumer, continued purchases by the PBOC reinforce long-term demand, particularly in an environment of rising geopolitical uncertainty.
Gold price dynamics (September 2024-February 2025). Source: TradingView
US tariffs add fuel to gold’s safe-haven appeal
Meanwhile, global trade concerns are adding further support to gold. U.S. President Donald Trump announced on Friday that he intends to introduce reciprocal tariffs on multiple countries, with an official announcement expected by midweek. This move is set to take effect almost immediately, fueling market uncertainty and increasing gold’s appeal as a safe-haven asset. Investors remain focused on developments around these tariffs, as further trade restrictions could sustain gold’s bullish momentum.
Gold’s recent surge suggests strong bullish sentiment, but technical indicators point to an overbought market. The RSI remains in elevated territory, hinting at the potential for short-term consolidation. However, fundamental drivers including central bank demand and trade policy risks which continue to provide a strong foundation for further gains.
Gold prices ended a five-day bullish streak with a 1.7% dip to $2,835. However, the market saw a mild recovery, with prices ticking higher on Friday, February 7.
