Gold prices climbed above $5,000 (£3,659) an ounce for the first time, extending a historic rally. The precious metal has risen more than 60% during 2025, marking an exceptional year.
Rising geopolitical and financial stress has fueled the surge. Tensions between the United States and Nato over Greenland have shaken investor confidence. Markets have reacted nervously to growing global instability.
US President Donald Trump has added pressure through aggressive trade policies. He recently threatened a 100% tariff on Canada. The threat targets any Canadian trade agreement with China.
Safe-haven assets return to favour
Investors often buy gold during periods of uncertainty. Many view it as protection against market shocks and political risk. Silver has followed the trend, pushing above $100 an ounce.
Silver built on gains of nearly 150% from last year. Other precious metals have also attracted strong demand. Investors have reduced exposure to volatile assets.
Economic forces have reinforced the move. Inflation has remained elevated across major economies. A weaker US dollar has increased overseas demand.
Central banks have continued building gold reserves. Expectations of further US interest rate cuts have added momentum.
Conflict and politics drive unease
Global conflicts have lifted gold prices further. Fighting in Ukraine and Gaza has intensified uncertainty. Political developments involving Venezuela have unsettled investors.
These events have pushed demand toward tangible assets. Gold often benefits when trust in political systems weakens. Analysts say prices reflect deepening anxiety.
Scarcity strengthens long-term appeal
Gold’s limited supply 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 production. Even so, future supply growth appears constrained.
The US Geological Survey estimates 64,000 tonnes remain underground. Experts expect output to plateau in coming years. Many believe scarcity will support prices.
An asset independent of debt markets
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 companies.
Frappell described gold as a strong portfolio diversifier. He said uncertainty has boosted its appeal. Investors value assets outside traditional finance.
A landmark year for precious metals
Gold recorded its biggest annual gain since 1979 during 2025. Investors poured into precious metals amid repeated market shocks. Prices reached record levels several times.
Concerns over trade tariffs and expensive technology stocks fueled demand. Many investors questioned equity market valuations. Gold benefited from those fears.
Susannah Streeter of Wealth Club said gold continues defying expectations. She said political uncertainty keeps demand strong. Trade tensions have repeatedly unsettled markets.
Interest rate cuts add fuel
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 choose metals instead.
Central banks accelerate buying
Central banks have played a major role in the rally. They added hundreds of tonnes of gold to reserves last year. Official sector demand 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 demand underpins global buying
Gold demand extends beyond investment motives. Many cultures value the metal for tradition and celebration. Families often buy gold during festivals and weddings.
In India, Diwali remains a major buying occasion. 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 key 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 appeared. The Year of the Horse begins in February.
