Gold prices have steadied after surging to a record high amid early signs of consolidation following the rally built on fears around U.S. President Donald Trump's trade policies. The precious metal eased to close at $3,287.72 an ounce on Wednesday, down 6.1% from the all-time peak of $3,500.05 hit on April 22. However, spot gold is still up 30% from the low of $2,536.71 an ounce on November 14, in the days following Trump's victory in the election against former Vice President Kamala Harris. Data from the World Gold Council (WGC) show that the rally has almost entirely been driven by investment flows, largely spurred by fears that the global economy will be hit hard by Trump's trade tariffs, which are poised to cut growth while boosting inflation in the United States. Total gold investment flows sky-rocketed by 170% in the first quarter of 2025 from the same period a year earlier, reaching 552 metric tons, the highest since the first quarter in 2022, the WGC said in its report on Wednesday. There were strong gains in flows into exchange-traded funds (ETFs), with demand of 226.5 tons in the first quarter, up from just 18.7 tons in the last quarter of 2024, and a massive surge from the sale of 113 tons in the first quarter of last year. Advertisement · Scroll to continue The surge in investment flows was more than enough to offset weakness in gold's other major drivers, with central bank purchases sliding 21% in the first quarter to 243.7 tons and jewellery fabrication dropping 19% to 434 tons. It's likely that high prices played their part in hammering jewellery demand, especially in the world's two biggest markets of China and India. China's jewellery demand dropped 32% in the first quarter from the same period in 2024 to 125.3 tons, while India's declined by 25% to 71.4 tons, the weakest since the third quarter of 2020, the WGC report said. The question for the market is whether the investment-fuelled gold rally still has legs left in it, or whether the Trump-inspired flight to safety has largely run its course.
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