The price of gold has reached an unprecedented high, soaring above $4,400 per ounce, a remarkable surge that has investors and analysts alike in a frenzy. But what's driving this meteoric rise? Let's delve into the factors behind this gold rush. But here's where it gets controversial...
The gold market has been on a rollercoaster ride this year, with geopolitical tensions, trade wars, and the ever-looming threat of inflation fueling investor demand for safe-haven assets. The US central bank's potential rate cuts next year have further fueled this fire, as investors seek to protect their portfolios from the uncertainties of the global economy.
Gold started the year at $2,600 an ounce, but the Trump tariffs, geopolitical tensions, and expectations of rate cuts have sent its price skyrocketing. The spot price of gold hit a high of $4,420 on Monday before slipping back, marking a more than 68% increase this year, the highest since 1979, according to Adrian Ash, director of research at BullionVault.
The precious metals market is abuzz with the idea that President Trump has triggered a gold frenzy. The trade war, attacks on the US Federal Reserve, and geopolitical tensions have all contributed to this surge, said Mr. Ash. Lower interest rate expectations typically mean lower returns for investments such as bonds, so investors look to commodities such as gold and silver to get a return, but also diversify their portfolios.
Another factor adding to demand is that central banks globally are expanding their own physical holdings of gold as a way to counter economic turbulence, reduce reliance on the US dollar, and diversify their own portfolios, according to analysis from Goldman Sachs, which predicted the pattern would continue in 2026. The steady increase in the price of gold across the year could be because it is seen as a way for traders to help shield themselves from the threat of inflation and economic turmoil, Anita Wright, chartered financial planner at Ribble Wealth Management, said.
The weaker US dollar has also helped push gold prices higher by making the metal cheaper for overseas buyers. Other precious metals have also had record years. The price of silver also hit a record of $69.44 an ounce on Monday. For 2025 so far, silver is up 138% year-to-date and platinum is at a 17-year high, vastly outperforming gold, underpinned by strong supply constraints, according to analysts. Unlike gold, the other precious metals are also used widely in industrial manufacturing which helps stoke demand.
In addition to the gold rush, oil prices rose on Monday, after the US ordered a 'blockade' last week of sanctioned oil tankers entering and leaving the country. The price of Brent crude rose 53 cents to $60.99 a barrel, while US oil was up 1.6% to $57.40. However, both measures look set to end 2025 at prices lower than where they started the year.
