Gold prices climbed above $5,000 (£3,659) an ounce for the first time ever, extending a historic surge. The metal has risen more than 60% during 2025, marking an exceptional rally.
The move reflects mounting geopolitical and financial tensions. Disputes between the United States and Nato over Greenland have unsettled investors. Markets have also reacted to broader fears about global stability.
US President Donald Trump has amplified concerns through hardline trade policies. He recently threatened a 100% tariff on Canada. The warning targets any Canadian trade agreement with China.
Investors rush into traditional safe havens
Investors often buy gold during periods of instability. Many view it as protection against market shocks. Silver has followed the same pattern, reaching $100 an ounce for the first time.
Silver prices built on gains of nearly 150% last year. Other precious metals have also attracted strong demand. Investors have shifted money away from riskier assets.
Economic pressures have added momentum. Inflation has stayed elevated across many economies. A weaker US dollar has also boosted demand from overseas buyers.
Central banks have increased gold purchases worldwide. Expectations of further US interest rate cuts have reinforced the trend.
Conflict and politics lift demand
Wars and political events have strengthened gold’s appeal. Fighting in Ukraine and Gaza has raised global anxiety. Political action involving Venezuela has further shaken confidence.
These developments have pushed investors toward tangible assets. Gold often benefits when trust in political systems erodes. Analysts say prices reflect deepening uncertainty.
Limited supply supports long-term value
Gold’s scarcity remains a key attraction. About 216,265 tonnes have ever been mined, according to the World Gold Council. That amount would fill only three to four Olympic swimming pools.
Most gold entered circulation after 1950. Improved mining technology unlocked new deposits. Even so, future supply growth appears limited.
The US Geological Survey estimates 64,000 tonnes remain underground. Experts expect production to level off in coming years. Many believe constrained supply will support prices.
Gold stands apart from debt markets
Analysts highlight gold’s independence from financial liabilities. Nicholas Frappell of ABC Refinery said gold carries no counterparty risk. Bonds and shares depend on issuers and corporate performance.
Frappell described gold as a powerful portfolio diversifier. He said uncertainty has increased its relevance. Investors value assets outside traditional financial structures.
A standout year for precious metals
Gold delivered its strongest annual gain since 1979 during 2025. Investors flocked to metals amid repeated market shocks. Prices reached record highs several times.
Fears over trade tariffs and expensive technology stocks drove demand. Many investors worried about inflated equity valuations. Gold benefited from those concerns.
Susannah Streeter of Wealth Club said gold continues defying expectations. She said political uncertainty keeps driving demand. Trade tensions have repeatedly rattled investors.
Interest rate expectations add momentum
Gold often rises when investors anticipate rate cuts. Lower rates reduce returns on bonds. Investors then seek alternatives like gold and silver.
Markets expect the US Federal Reserve to cut rates twice this year. Falling yields reduce the appeal of government debt. Analysts say gold gains from that shift.
Ahmad Assiri of Pepperstone said investors move away from bonds. He said gold benefits when opportunity costs fall. Many choose metals instead.
Central banks reduce dollar exposure
Central banks have played a major role in the rally. They added hundreds of tonnes of gold to reserves last year. Official sector buying has remained strong.
Analysts see a clear move away from the US dollar. Kavalis said this trend has strongly supported gold. Many countries seek diversification.
Despite the surge, risks remain. Frappell warned that news-driven markets can reverse quickly. Positive global developments could weigh on prices.
Cultural buying underpins demand
Gold demand extends beyond investment. Many cultures value the metal for tradition and celebration. Families often buy gold during festivals and weddings.
In India, Diwali remains a key buying period. Many believe gold brings wealth and good fortune. Gifts of gold remain common.
Morgan Stanley estimates Indian households hold $3.8tn in gold. That equals about 88.8% of national GDP. Gold dominates household wealth.
China also drives global demand. It ranks as the world’s largest single consumer market. Many buyers associate gold with luck.
Kavalis said demand often rises around Chinese New Year. He said a seasonal increase has already appeared. The Year of the Horse begins in February.
