Gold has surged past the $5,000 (£3,659) an ounce mark for the first time in history, extending a powerful rally that has seen the precious metal gain more than 60% so far in 2025.
The latest milestone reflects mounting anxiety across global markets, driven by rising geopolitical tensions and fears over economic stability. Strains between the United States and NATO over Greenland have unsettled investors, while US President Donald Trump’s aggressive trade stance has further rattled confidence. Over the weekend, Trump warned that Canada could face a 100% tariff if it proceeds with a trade agreement with China.
Gold, long viewed as a safe-haven asset, typically benefits during periods of heightened uncertainty as investors seek protection from market volatility. Other precious metals have also joined the rally. Silver climbed above $100 an ounce for the first time on Friday, building on gains of nearly 150% recorded last year.
Several structural factors are reinforcing demand for gold. Persistent inflation across major economies, a weakening US dollar and sustained buying by central banks have all contributed to upward price pressure. Expectations that the US Federal Reserve will cut interest rates again this year have further boosted the appeal of non-yielding assets such as gold.
Ongoing conflicts in Ukraine and Gaza have added to geopolitical risk, while Washington’s seizure of Venezuelan President Nicolás Maduro has deepened concerns over international instability. Together, these developments have strengthened gold’s role as a store of value in uncertain times.
Gold’s scarcity also underpins its long-term appeal. According to the World Gold Council, approximately 216,265 tonnes of gold have ever been mined enough to fill just three to four Olympic-sized swimming pools. Much of this supply has been extracted since 1950, as advances in mining technology unlocked new deposits. The US Geological Survey estimates that around 64,000 tonnes remain underground, although global output is expected to level off in the coming years.
“When you own gold, it’s not tied to the debt of somebody else, like a bond, or to corporate performance like equities,” said Nicholas Frappell, global head of institutional markets at ABC Refinery. “It’s a strong diversifier in a world that feels increasingly unpredictable.”
Gold enjoyed a blockbuster performance in 2025, posting its biggest annual gain since 1979 as investors poured money into precious metals. Concerns over Trump’s tariff policies, alongside fears that artificial intelligence-linked stocks may be overvalued, pushed gold to repeated record highs throughout the year.
Lower interest rates have also played a crucial role. When rates fall, returns on assets such as government bonds decline, reducing the opportunity cost of holding gold. The Federal Reserve is widely expected to cut its benchmark rate twice this year, reinforcing bullish sentiment.
“It’s inversely correlated,” said Ahmad Assiri, research strategist at Pepperstone. “When bond returns look unattractive, people go to gold.”
Central banks have emerged as major buyers, adding hundreds of tonnes of bullion to their reserves last year, according to the World Gold Council. Analysts say this reflects a broader shift away from reliance on the US dollar, further strengthening gold’s position.
Despite the rally, some experts warn that gold’s rise has been heavily news-driven and could reverse if global conditions improve. “There’s always scope for unexpected positive developments that may not be supportive for gold,” Frappell cautioned.
Beyond investment demand, cultural and seasonal buying remains significant. In India, gold purchases are closely linked to festivals such as Diwali and to weddings, where the metal is seen as a symbol of prosperity and good fortune. Morgan Stanley estimates Indian households hold $3.8 trillion worth of gold, equivalent to nearly 89% of the country’s GDP.
China, the world’s largest consumer market for gold, also plays a critical role. Demand typically rises around Lunar New Year, driven by beliefs that gold brings luck and financial security. Analysts say this seasonal uptick is already contributing to the metal’s continued strength as the Year of the Horse approaches in February.
Erizia Rubyjeana
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