The price of gold has hit a historic milestone, soaring above $5,000 (£3,659) an ounce for the first time ever. This alarming increase has occurred amid rising geopolitical tensions, especially between the US and NATO, particularly over Greenland. Concerns regarding US trade policies under President Trump have also unsettled markets. Recently, he threatened to impose hefty tariffs on Canada, igniting further worries.
In uncertain times, people often turn to gold and other precious metals as a safe haven. Just recently, silver also crossed $100 an ounce, reflecting a dramatic rise of nearly 150% last year.
Several factors have pushed the demand for gold higher. Inflation rates remain elevated, the US dollar is weak, and many central banks around the world are increasing their gold reserves. Analysts expect the US Federal Reserve to lower interest rates again this year, which could drive even more investors to gold.
Global conflicts, especially the wars in Ukraine and Gaza, have further fueled this surge in gold prices. Interestingly, only about 216,265 tonnes of gold have ever been mined globally, enough to fill three to four Olympic-sized swimming pools. Most of this gold has been extracted since 1950, thanks to advancements in mining technology. The US Geological Survey estimates that there are about 64,000 tonnes still waiting to be mined, but that the overall supply might plateau soon.
According to Nicholas Frappell, from ABC Refinery, gold is particularly attractive because it’s not tied to anyone else’s debt. In an uncertain global financial landscape, having a physical asset like gold offers real security. “It’s a really good diversifier,” he said. In 2025, gold experienced its most significant annual gain since 1979, reflecting its solid performance amid fears surrounding economic policies and overvalued tech stocks.
“The extreme uncertainty around US policy has driven many to gold,” shared Nikos Kavalis from Metals Focus. As interest rates are expected to dip, the allure of gold becomes even more pronounced. Lower returns on safer investments like bonds encourage investors to shift towards gold and silver.
Interestingly, the surge in gold isn’t just coming from traditional investors. Central banks globally have been adding significant amounts of gold to their reserves, marking a notable shift away from reliance on the US dollar. This shift has been beneficial for gold prices, according to Kavalis. However, Frappell warns that unexpected positive news could change market dynamics and possibly lead to a dip in gold prices.
Not just an investment, gold holds cultural significance, especially in countries like India and China. In India, gold is often purchased during festivals like Diwali, symbolizing prosperity. According to Morgan Stanley, Indian households own approximately $3.8 trillion in gold—mind-boggling when compared to the country’s GDP. Meanwhile, in China, where many believe that buying gold invites good luck, the demand spikes around the Lunar New Year.
As various cultures continue to embrace gold, its demand is expected to remain high. Whether viewed as a safe investment or a cultural staple, gold’s allure shows no signs of diminishing anytime soon.
