Happy Sunday, and welcome to Benzinga’s financial advisor newsletter.

Today we're discussing the cause of the latest surge in gold prices — and a look back at the last week of market activity.

So, let’s get into the Industry Chatter!

But first, did someone forward you this email? Click here to subscribe!

Lastly, if you would like to be featured in our upcoming Advisor Spotlight and showcase your business in front of all our subscribers, click here to send us an email.

INDUSTRY CHATTER

What’s Actually Driving the Latest Gold Surge?

Gold prices have been on a tear lately, surpassing $3,000 per ounce in mid-March and up nearly 38% in the last year. Investors have been flocking to the precious metal as economic uncertainty grows, with global trade tensions playing a major role.

The latest boost came after U.S. President Donald Trump announced new auto tariffs, sparking concerns about inflation and sending markets into a frenzy. With fears of a trade war escalating, gold’s reputation as a safe-haven asset has only strengthened, according to Reuters.

There are plenty of ways to invest in gold, and it’s not just about buying physical bars. The spot market, where prices are determined in real-time, remains a major force, especially in financial hubs like London. Futures markets, led by COMEX in New York, allow traders to lock in prices for gold at a later date. Exchange-traded funds (ETFs) have also gained popularity, letting investors gain exposure to gold prices without dealing with storage.

And for those who prefer something tangible, gold bars and coins remain a go-to option. You can even buy gold at Costco…

So, what’s actually driving gold’s rise?

A combination of factors is at play, but investor sentiment is a big one. When financial markets turn volatile, gold tends to shine as a safe investment. Currency movements also matter—gold and the U.S. dollar often move in opposite directions, meaning a weaker dollar makes gold more attractive.

Central banks are another major influence. Many have been increasing their gold reserves in response to global economic shifts, helping push demand to record levels last year, according to CNBC.

With gold prices climbing, financial analysts are adjusting their expectations. Goldman Sachs and Bank of America have both raised their forecasts for the coming year, citing strong investor demand and continued geopolitical uncertainty. As global economies navigate inflation concerns, shifting trade policies, and fluctuating interest rates, it will be interesting to monitor gold’s performance.

MARKET RECAP

Trump's 25% Auto Tariffs Rattle Wall Street, Fed's Favorite Inflation Gauge Surges, Consumer Price Worries Rocket: This Week In Markets

Risk sentiment deteriorated sharply in the second half of the week after President Donald Trump announced sweeping tariffs on imported automobiles, compounding concerns about rising inflationary pressures.

On Wednesday evening, the White House revealed plans to impose a 25% tariff on auto imports, in addition to a set of reciprocal tariffs expected to be unveiled next week. The administration cited national security risks as the justification for the measures, which may also extend to auto parts by May.

The policy shift sent shockwaves across the automotive industry. Michigan-based giants General Motors Co. and Ford Motor Co. posted steep losses in the wake of the announcement. In contrast, Tesla Inc. and Rivian Automotive Inc. — both of which manufacture all their vehicles domestically — proved more resilient.

According to Goldman Sachs estimates, the tariffs could push vehicle prices up by $5,000 to $15,000, adding significant cost pressure on American consumers.

The market impact didn't stop at autos. Broader sectors were also dragged lower amid fears Trump could escalate trade tensions next week with key commercial partners, especially as the U.S. trade deficit remains near record highs.

Tariff tensions are now bleeding into inflation data. The Fed's preferred inflation gauge — the core Personal Consumption Expenditures price index — rose 2.8% year-over-year in February, surpassing expectations of 2.7%. The unexpected acceleration further complicates the Federal Reserve's case for near-term rate cuts.

But the worst surprise came Friday. The University of Michigan's consumer survey revised inflation expectations even higher. Americans now expect inflation to average 4.1% over the next five years, up 0.2 percentage points from earlier estimates and the highest level since February 1993.

Overall consumer sentiment plunged to its lowest level since November 2022, as households grow increasingly uneasy about the labor market outlook.

Amid the prevailing uncertainty, gold reaffirmed its status as a safe-haven asset, climbing to new record highs by week's end.

Meanwhile, the Congressional Budget Office delivered another wake-up call: there’s no end in sight to America's growing debt burden. The national debt is projected to surpass its World War II peak by 2029, and soar to 156% of GDP by 2055 — with no signs of slowing thereafter.

THE WEEK AHEAD

US job openings, employment report, Fed Chairman Jerome Powell speaks and more

Economic Data

• Monday: Chicago Business Barometer (PMI)

• Tuesday: US job openings and manufacturing (PMI)

• Wednesday: US Fed Governor Adriana Kugler speaks, ADP employment

• Thursday: US initial jobless claims, US trade deficit

• Friday: US employment report, Fed Chairman Jerome Powell speaks

Earnings

• Monday: Loar Holdings (LOAR), PVH Corp (PVH)

• Tuesday: nCino (NCNO), CG Oncology (CGON)

• Wednesday: Macro Bank (BMA), RH (RH)

• Thursday: ConAgra Brands (CAG), Acuity (AYI)

• Friday: Greenbrier Companies (GBX), Lifezone Metals Limited (LZM)

Click here for the full calendar of economic data and earnings reports.

LEARN WITH BENZINGA PRO