Gold prices climbed above $5,000 (£3,659) an ounce for the first time, extending a historic advance. The metal has risen more than 60% during 2025, delivering one of its strongest years.
Growing geopolitical and financial tensions have fueled the surge. Disagreements between the United States and Nato over Greenland have shaken confidence. Investors have grown wary about broader global stability.
US President Donald Trump has heightened unease with forceful trade policies. He recently threatened a 100% tariff on Canada. The warning targets any Canadian trade agreement with China.
Safe havens regain centre stage
Investors typically buy gold during turbulent periods. Many see it as protection against market shocks and political risk. Silver has mirrored the trend, crossing $100 an ounce.
Silver extended gains of nearly 150% from last year. Other precious metals have also drawn strong demand. Investors have shifted capital away from risk-heavy assets.
Economic pressures have strengthened the move. Inflation has stayed elevated across major economies. A weaker US dollar has increased overseas demand.
Central banks have continued adding gold to reserves. Expectations of further US interest rate cuts have reinforced momentum.
Conflict and politics fuel anxiety
Wars and political events have lifted gold demand. Fighting in Ukraine and Gaza has raised global uncertainty. Political action involving Venezuela has further unsettled markets.
These developments have pushed investors toward tangible assets. Gold often benefits when trust in political systems weakens. Analysts say prices reflect deepening anxiety.
Scarcity supports long-term value
Gold’s limited supply underpins its appeal. About 216,265 tonnes have ever been mined, according to the World Gold Council. That amount would fill three to four Olympic swimming pools.
Most gold entered circulation after 1950. Advances in mining technology unlocked new deposits. Even so, supply growth now looks constrained.
The US Geological Survey estimates 64,000 tonnes remain underground. Experts expect production to plateau in coming years. Many believe scarcity will support prices.
An asset detached from debt
Analysts highlight gold’s independence from financial liabilities. Nicholas Frappell of ABC Refinery said gold carries no counterparty risk. Bonds and shares rely on issuers and companies.
Frappell described gold as a powerful portfolio diversifier. He said uncertainty has boosted its relevance. Investors value assets outside traditional finance.
A standout year for precious metals
Gold posted its biggest annual gain since 1979 during 2025. Investors flocked to metals amid repeated market shocks. Prices set new records several times.
Fears over trade tariffs and costly technology stocks drove demand. Many investors questioned equity market valuations. Gold benefited from those concerns.
Susannah Streeter of Wealth Club said gold continues surprising markets. She said political uncertainty sustains demand. Trade tensions have repeatedly unnerved investors.
Rate cut expectations add lift
Gold often rises when investors expect lower interest rates. Reduced rates shrink returns on bonds. Investors then seek alternatives like gold and silver.
Markets widely expect two US rate cuts this year. Falling 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 investors choose metals instead.
Central banks reshape 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 stayed 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 pressure prices.
Cultural buying underpins demand
Gold demand extends beyond investment motives. Many cultures prize the metal for tradition and celebration. Families often buy gold during festivals and weddings.
In India, Diwali remains a major buying period. Many believe gold brings prosperity and luck. Gold gifts 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 plays a decisive role in demand. It ranks 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 appeared. The Year of the Horse begins in February.
