It’s been a very good time to be a gold bug. Gold has experienced a renaissance recently as investors have sought safe havens amid growing economic uncertainty following weaker U.S. economic data and an escalating trade war.
Gold prices have surged about 20% in 2025, including an impressive 10% return in April, largely after President Trump’s Liberation Day tariff announcement on April 2.
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The rapid rise in gold prices is particularly intriguing to many investors, given the struggles of stocks and Treasury bonds. The S&P 500 is down 9%, while the 20-year Treasury Bond ETF (TLT) has lost 3.5% of its value this month.
Gold’s significant outperformance has caught the attention of major gold analysts, who recently reset their gold targets following the big move higher.
Gold experiences big tailwinds from economic uncertainty
The U.S. economy was already experiencing signs of slowing down heading into this month’s big tariff announcement.
While unemployment remains historically low, it has increased to 4.2% from 3.5% in 2023, and there’s been an increase in layoffs lately. Over 497,000 people were laid off in the first quarter, the most in the quarter since 2009, and up 93% from Q1, 2024, according to Challenger, Gray, & Christmas.
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We’ve also seen weaker manufacturing and services sector activity this year. ISM’s manufacturing index fell to 49 in March from 50.9 in December, and its services index slumped to 50.8, down from 54 in December. Readings below 50 are generally associated with a contracting economy.
Slowing economic data has the Atlanta Fed’s GDPNow forecasting tool predicting negative 2.4% GDP growth in the first quarter. That number will likely change as more data is reported, but it still looks very likely that GDP will register meaningfully shy of the 3% pace seen last summer.
The new tariffs will likely compound problems. President Trump’s decision to impose import taxes on most countries of at least 10% is inflationary, as most companies will look to pass along higher costs to customers.
The problem is much worse for China’s imports, given that an escalating trade war has erupted. U.S. tariffs on Chinese imports are 145%, and China’s tariffs on American imports are 125%. These levels are high enough to effectively shut down trade between the two giant economies.
The combination of weaker GDP and potentially sticky inflation has economists worried about stagflation, or worse, a recession.
Those concerns alone would make gold interesting to investors looking for potentially safer assets than stocks like precious metals or Treasury bonds.
The trade war, however, has made bonds less attractive. Thirty percent of treasuries are held by overseas buyers who are less inclined to finance our economy amid a trade war. The 10-year Treasury Bond has sold off sharply this month, sending the yield up to 4.5% from below 4% on April 4.
A similar situation is playing out with the U.S. Dollar. The U.S. Dollar Index DXY measures the value of the U.S. Dollar to a basket of major currencies. It’s down nearly 3.8% this month. Historically, gold has moved in the opposite direction to the U.S. dollar because gold is dollar-denominated, meaning a weaker dollar makes buying gold more attractive to overseas investors.
Analysts update gold price targets amid rally
Gold prices have soared to over $3,200 this month, an all-time high for the precious metal. It may have more room to continue higher, according to UBS and Deutsch Bank analysts.
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UBS analysts say gold price increases will “extend into next year and for prices to stabilize at higher levels further out.” Its current price target is $3,500 per ounce, citing declining demand for Treasuries and the U.S. Dollar. UBS 2025 gold target is the highest among major banks.
Meanwhile, Deutsche Bank is targeting $3,700 per ounce in 2026. Previously, analysts at the bank expected $2,900.
On Thursday, opening bids were placed for 400,000 ounces of gold valued at $1.3 billion in a daily auction favored by central banks and gold ETFs. According to Bloomberg, that was the largest volume since September 2019.
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