Tariff turmoil, a gold rush and the sinking dollar — 2025 in charts

The United States has entered an unprecedented phase of trade protectionism, with the average applied tariff rate climbing to 16.8 %, the highest level since 1943. The most striking illustration of this shift came on 7 August, when customs officials imposed a 39 % duty on 1‑kg gold bars, sending spot gold to an intraday peak of $3,534 / oz the following day. By the end of November, the metal had surged 72 % year‑to‑date, reaching a record $4,170 / oz – a nominal level five times the 1980 high of $850, even though the percentage gain is modest compared with the 2,300 % rally of the 1970s. The rally is being fuelled not only by tariff‑driven uncertainty but also by a weakening dollar, with the USDX slipping to 92.3 in October, a 7 % decline from January, echoing the 14 % fall witnessed in the 1979‑80 oil shock.

The tariff regime of 2025 is broader and more aggressive than its 1970s‑80s predecessor. While the post‑1975 Trade Expansion Act lifted the U.S. average tariff to roughly 12 %, today’s 16.8 % average covers consumer goods, high‑tech components and even bullion. The direct link between tariff announcements and gold price spikes is evident: the August 8 intraday high followed the gold‑bar tariff, whereas in the 1970s gold rose after a 10 % oil surcharge and a 25 % automobile levy. Despite the higher tariff burden, the macro‑economic drag appears limited – U.S. real GDP is estimated to have lost 0.2 % in June due to retaliatory measures, a far smaller contraction than the 1.5‑point slowdown that accompanied the second oil shock in 1979‑80.

The dollar’s depreciation remains a central catalyst. Starting the year at an index near 99, the dollar has already lost ground against major currencies, amplifying gold’s dollar‑denominated price. Yet the context differs: the Federal Reserve is holding policy rates at 4.75‑5.00 %, a tighter stance than the 1970s when rates fell to single digits as inflation surged. Consequently, today’s gold rally is counter‑cyclical to high rates, a pattern absent in the earlier era when falling rates and soaring inflation drove investors to bullion.

Investor behaviour underscores the structural shift. Gold‑ETF holdings have risen 14 % year‑on‑year, now totalling roughly 49,400 t, while central banks have added over 1,000 t of gold in 2025 alone, pushing cumulative reserves since 2022 above 5,000 t. In the 1970s, sovereign buying was modest – around 300 t – and the flight‑to‑gold was largely a private‑investor phenomenon. Emerging‑market central banks now dominate the demand engine, using gold to diversify away from a dollar‑centric reserve composition.

The confluence of aggressive tariffs, a softening dollar and robust sovereign demand creates a multi‑factor “gold rush” that cannot be reduced to a simple repeat of the 1970s inflationary surge. While the percentage price move is smaller, the absolute level of $4,170 / oz sets a new benchmark for safe‑haven assets. The trade‑war environment, coupled with a fragmented global order, suggests that gold’s rally may persist as long as tariff volatility and dollar weakness continue to feed investor anxiety.

Bottom line: 2025’s tariff intensity exceeds historic peaks, directly amplifying gold’s price spikes; the metal’s nominal price has reached unprecedented heights thanks to a weaker dollar and unprecedented sovereign buying; and the current environment, characterised by high interest rates and broad‑based trade barriers, marks a distinct departure from the 1970s‑80s gold boom.

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