INTERNATIONAL,JS- Gold has climbed above $5,000 (£3,659) per ounce for the first time ever, continuing a spectacular rally that saw the precious metal rise more than 60% in 2025. Investors attribute this surge to a mix of economic uncertainty, geopolitical tensions, and market volatility.
Rising Tensions and Trade Concerns
Tensions between the US and NATO over Greenland have unsettled markets. Adding to concerns, President Donald Trump recently threatened a 100% tariff on Canada if it finalized a trade deal with China. These developments pushed investors toward safe-haven assets such as gold and silver.
Silver has also reached record levels, topping $100 per ounce, following a nearly 150% increase last year. Rising inflation, a weakening US dollar, and central banks actively buying gold have further supported the rally. Analysts expect the US Federal Reserve to cut interest rates later this year, which could boost demand for precious metals even more.
Conflict and Political Risk Drive Demand
Wars in Ukraine and Gaza, along with US actions against Venezuelan President Nicolás Maduro, have fueled investor concerns. These events encourage the purchase of gold as a hedge against political instability.
Gold’s Scarcity Enhances Its Appeal
Gold’s limited supply adds to its allure. According to the World Gold Council, miners have extracted only 216,265 tonnes of gold in history—enough to fill three to four Olympic-sized swimming pools. Most of this extraction occurred after 1950 due to advances in mining technology and new discoveries. The US Geological Survey estimates another 64,000 tonnes remain in underground reserves, but overall supply will likely plateau in the coming years.
Nicholas Frappell, global head of institutional markets at ABC Refinery, explained, “Gold doesn’t rely on anyone else’s debt like bonds do, or on a company’s performance like equities. It diversifies your portfolio in uncertain times.”
Gold Breaks Records in 2025
Gold experienced its biggest annual gain since 1979, attracting investors wary of volatile financial markets. Concerns about tariffs and overpriced artificial intelligence stocks repeatedly pushed the metal to new highs.
“Gold continues to defy limits amid ongoing political uncertainty,” said Susannah Streeter, chief investment strategist at Wealth Club. “Investors keep flocking to this safe-haven asset.”
Interest Rate Expectations Boost Prices
Expectations of lower interest rates further strengthened gold. When rates fall, traditional investments like bonds yield less, prompting investors to seek alternatives. Ahmad Assiri, research strategist at Pepperstone, noted, “Gold rises when holding bonds becomes less profitable.”
Central Banks and Cultural Demand
Central banks worldwide have added hundreds of tonnes of gold to their reserves, reflecting a shift away from the US dollar.
Cultural traditions also drive gold purchases. In India, people buy gold during festivals such as Diwali or gift it at weddings. Morgan Stanley estimates Indian households hold $3.8 trillion in gold, nearly 89% of the country’s GDP. China, the world’s largest single consumer of gold, also sees seasonal demand around the Chinese New Year, marking the Year of the Horse.
Caution Ahead
Despite the record rally, experts warn that gold remains sensitive to news. Frappell commented, “Unexpected positive developments could trigger a pullback in gold prices.”
For now, both investors and cultural buyers continue to push gold to historic highs, making it the standout asset in a volatile global market.(TIM)
