Gold prices shattered records on Thursday, soaring past $3,200 per ounce in a remarkable rally, up from its previous high of $3,171.49.

This surge, driven by escalating tensions in the US-China trade war and a significant weakening of the US dollar, highlights the precious metal's enduring appeal as a safe-haven asset. Investors, rattled by mounting economic uncertainty, have flocked to gold, pushing its value to unprecedented heights in a session that saw spot gold climb over $3200 creating new historical high.

The rally coincides with a sharp escalation in the trade dispute between the world's two largest economies. Trump recently announced a 90-days pause on the tariff policy for most countries, offering some relief to the escalating trading tension.

However, he simultaneously intensified pressure on China, raising tariffs to 125% from the previous 104%. This dramatic hike has heightened fears of a global economic slowdown, sending investors scrambling for the stability that gold provides.

Adding fuel to gold's ascent, the US dollar weakened considerably, with the dollar index DXY dropping over 1% against a basket of major currencies. A softer dollar makes gold, which is priced in dollars, more affordable for investors holding other currencies, thereby boosting demand and contributing to the record-breaking price surge.

Recent economic data has further bolstered gold's appeal. US consumer prices unexpectedly declined in March, suggesting a cooling in inflationary pressures. Yet, the tariff increase on China has kept inflation risks alive, tilting them upward. In response, traders anticipate aggressive action from the US Federal Reserve, with expectations of a policy rate cut by as much as a full percentage point by year-end. Lower interest rates typically weaken the dollar further and reduce the opportunity cost of holding non-yielding assets like gold, providing a tailwind for its price.

Expert insights underscore the dynamics behind this rally. Senior Market Analyst , noted, "Gold regains its safe-haven appeal and gets back on track for new all-time highs. However, prospects of deals with trading partners pose a significant risk to gold's upside potential, as they could renew pressure on the metal. Additionally, headwinds may arise from pared-back Fed rate cut bets that can strengthen the dollar."

Meanwhile, Chief Operating Officer at Allegiance Gold, emphasized sustained demand, stating, "We see central banks buying gold, so as long as we see inflows into ETFs and more of the monetary policy risks, there's a lot of key drivers that will continue to support gold." These perspectives highlight both the momentum propelling gold and the potential challenges ahead.

Interestingly, gold's safe-haven status faced a test earlier this month when the S&P 500 plummeted 10.5%, wiping out approximately $6.6 trillion in market value. During this turmoil, gold prices also dipped, which might have surprised some observers and raised doubts about its reliability as a refuge.

However, this decline was not a reflection of waning investor confidence in gold. Instead, it stemmed from traders selling assets across the board to cover margin calls triggered by losses in other positions. A commodities analyst at goldman sachs, addressed this directly: "Short answer is no, gold's safe-haven status has not weakened. We will likely see a rise in gold prices once the margin-driven liquidation is completed, after which we expect to see a sharp increase in gold demand." She suggests that the dip was a temporary blip, and gold's role as a safe haven remains intact.