The price of gold has surged above $5,000 (£3,659) an ounce for the first time in history, extending a remarkable rally that saw the precious metal gain more than 60 percent in 2025.
The surge comes amid heightened geopolitical and financial uncertainty, including tensions between the United States and NATO over Greenland, as well as growing unease over global trade and security.
Markets have also been unsettled by US President Donald Trump’s trade policies. Over the weekend, he threatened to impose a 100 percent tariff on Canada should it enter into a trade agreement with China.
Gold and other precious metals are traditionally regarded as safe-haven assets, attracting investors during periods of uncertainty. On Friday, silver also crossed a historic threshold, topping $100 an ounce for the first time after rising nearly 150 percent last year.
Demand has been further fuelled by persistent inflation, a weak US dollar, increased purchases by central banks and expectations that the US Federal Reserve will cut interest rates again this year.
Ongoing conflicts in Ukraine and Gaza, alongside geopolitical tensions involving Venezuela, have also contributed to the upward pressure on gold prices.
One of gold’s enduring attractions is its scarcity. According to the World Gold Council, only about 216,265 tonnes of gold have ever been mined — enough to fill between three and four Olympic-sized swimming pools. Much of that extraction has occurred since 1950, driven by advances in mining technology and the discovery of new deposits.
The US Geological Survey estimates that around 64,000 tonnes of gold remain underground, although global supply is expected to level off in the coming years.
“When you own gold, it’s not attached to the debt of somebody else like a bond, or dependent on company performance like equities,” said Mr. Nicholas Frappell, Global Head of Institutional Markets at ABC Refinery.
“It’s a strong diversifier in a very uncertain world.”
‘People go to gold’
Gold enjoyed a blockbuster year in 2025, recording its biggest annual gain since 1979 as investors flocked to precious metals.
With financial markets rattled by trade tensions and fears that artificial intelligence-related stocks may be overvalued, gold repeatedly set new record highs.
“A large part of this rally is driven by the extreme uncertainty surrounding US policy,” said Mr. Nikos Kavalis of research consultancy Metals Focus.
Gold prices also tend to rise when interest rates are expected to fall. Lower rates reduce returns on bonds and similar investments, making assets such as gold and silver more attractive.
The US Federal Reserve is widely expected to cut its benchmark interest rate twice this year.
“It’s inversely correlated,” said Mr. Ahmad Assiri, Research Strategist at Pepperstone. “When the opportunity cost of holding government bonds becomes unattractive, people move to gold.”
Central banks have also played a major role in driving demand. Last year, they added hundreds of tonnes of bullion to their reserves, according to the World Gold Council.
“There is a clear shift away from the US dollar, and that is benefiting gold significantly,” Mr. Kavalis noted.
While gold has continued its upward trajectory this year, Mr. Frappell cautioned that the largely news-driven market could reverse if global conditions improve.
“There is always the possibility of unexpected positive news for the world — and that wouldn’t necessarily be positive for gold,” he said.
Gold’s appeal, however, extends beyond investment.
In many cultures, the metal is purchased during festivals or given as gifts at celebrations such as weddings. In India, the annual Diwali festival is considered an auspicious time to buy gold, believed to bring wealth and good fortune.
According to US investment bank Morgan Stanley, Indian households hold an estimated $3.8 trillion worth of gold, equivalent to 88.8 percent of the country’s Gross Domestic Product (GDP).
China remains the world’s largest single consumer market for gold, where it is widely believed to symbolise prosperity and good luck. Demand often rises around the Chinese New Year, a trend analysts say is already emerging ahead of the Year of the Horse, which begins in February.
