Gold prices surged above $5,000 (£3,659) an ounce for the first time, extending a historic rise. The precious metal has gained more than 60% during 2025, capping a remarkable rally.
Mounting geopolitical and financial tensions have driven the surge. Friction between the United States and Nato over Greenland has unsettled markets. Investors have grown increasingly concerned about global stability.
US President Donald Trump has added to uncertainty with hardline trade policies. He recently threatened a 100% tariff on Canada. The move would follow any Canadian trade deal with China.
Safe-haven demand surges across markets
Investors traditionally turn to gold during periods of turmoil. Many see it as protection against market shocks and political risk. Silver has followed the same path, rising above $100 an ounce.
Silver built on gains of nearly 150% from last year. Other precious metals have also attracted strong buying. Investors have reduced exposure to volatile assets.
Economic pressures have reinforced the trend. Inflation has remained elevated across major economies. A weaker US dollar has boosted overseas demand for gold.
Central banks have continued buying bullion. Expectations of further US interest rate cuts have strengthened momentum.
Conflict and politics deepen uncertainty
Wars and political events have pushed gold prices higher. Fighting in Ukraine and Gaza has intensified global anxiety. Political developments involving Venezuela have further shaken confidence.
These events have encouraged demand for tangible assets. Gold often benefits when trust in political systems fades. Analysts say prices mirror growing unease.
Limited supply supports lasting value
Gold’s scarcity remains a core attraction. About 216,265 tonnes have ever been mined, according to the World Gold Council. That volume would fill three to four Olympic-sized swimming pools.
Most gold entered circulation after 1950. Advances in mining technology increased output. Even so, future supply growth appears limited.
The US Geological Survey estimates 64,000 tonnes remain underground. Experts expect production to plateau in coming years. Many believe scarcity will support prices.
Independence from debt drives appeal
Analysts highlight gold’s separation from financial liabilities. Nicholas Frappell of ABC Refinery said gold carries no counterparty risk. Bonds and equities depend on issuers and company performance.
Frappell described gold as a strong portfolio diversifier. He said uncertainty has boosted its relevance. Investors value assets outside traditional finance.
A historic year for precious metals
Gold recorded its biggest annual gain since 1979 during 2025. Investors poured into metals amid repeated market shocks. Prices reached fresh records several times.
Concerns over trade tariffs and expensive technology stocks drove demand. Many investors questioned equity market valuations. Gold benefited from those doubts.
Susannah Streeter of Wealth Club said gold continues to exceed expectations. She said political uncertainty keeps demand strong. Trade tensions have repeatedly unsettled investors.
Rate cut expectations lift prices
Gold often rises when investors expect lower interest rates. Falling rates reduce returns on bonds. Investors then seek alternatives like gold and silver.
Markets widely expect two US rate cuts this year. Lower yields weaken the appeal of government debt. Analysts say gold benefits from this shift.
Ahmad Assiri of Pepperstone said investors move away from bonds. He said lower opportunity costs favour gold. Many choose metals instead.
Central banks reshape global reserves
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 shift away from the US dollar. Kavalis said this move has strongly supported gold prices. 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 traditions sustain global demand
Gold demand extends beyond investment markets. Many cultures value the metal for tradition and celebration. Families often buy gold during festivals and weddings.
In India, Diwali remains a key buying season. Many believe gold brings prosperity and luck. Gold gifts remain common.
Morgan Stanley estimates Indian households hold $3.8tn worth of gold. That equals about 88.8% of national GDP. Gold dominates household wealth.
China also plays a central role in demand. It stands as the world’s largest single consumer market. Many buyers associate gold with good fortune.
Kavalis said demand often rises around Chinese New Year. He said a seasonal increase has already emerged. The Year of the Horse begins in February.
