Gold prices surged to a record high of $3,375.85 per ounce, rising 1.45% or $48.31 on Monday, continuing their meteoric rally amid heightened geopolitical tensions, aggressive central bank buying, and rising concerns over U.S. economic policy. The yellow metal has now rallied over 53% since October 2023, firmly cementing its position as the world’s preferred safe-haven asset in 2025.
This is the highest price ever recorded for gold, with the previous 52-week range spanning from $2,277.47 to today’s high of $3,385.27.
Why Gold is rising:
1. Geopolitical and trade uncertainty:
The rally comes on the back of escalating tensions between the U.S. and China, largely triggered by President Trump’s new wave of tariffs, including a 125% tariff on Chinese imports. These protectionist moves have sparked fears of a prolonged global trade war, leading investors to rush into gold as a hedge.
2. Central bank demand at record levels:
Central banks — especially from China, Russia, India, and Turkey — have been aggressively accumulating gold to diversify reserves away from the U.S. dollar. Purchases exceeded 1,000 tonnes in 2024 and have shown no signs of slowing in 2025.
3. Weakening U.S. dollar:
The U.S. dollar has weakened due to growing fiscal concerns, trade imbalances, and a waning appetite for U.S. treasuries. A weaker dollar makes gold cheaper for global buyers, further pushing up demand.
4. Inflation and stagflation fears:
With tariffs pushing input costs higher, investors are bracing for inflation and even stagflation, making gold an attractive store of value. Despite temporary moderation, inflationary pressures remain persistent.
5. Lower interest rate expectations:
Markets are betting on the U.S. Federal Reserve to cut rates in the second half of 2025. Lower interest rates reduce the opportunity cost of holding gold, enhancing its appeal.
6. Surging ETF and investor demand:
Investor appetite for gold-backed ETFs is at a multi-year high, with $9.4 billion of inflows in February 2025 alone. Institutional and retail investors are increasingly using gold to hedge against equity market volatility and systemic risks.
7. Bullish momentum:
Gold’s consistent climb has triggered momentum buying, with long-term price projections now eyeing $3,500 or more by year-end. Technical breakouts and bullish sentiment are reinforcing the rally.
8. De-dollarization trends:
A growing number of countries are reducing reliance on the U.S. dollar, favoring gold as a neutral and tangible reserve asset. This trend has accelerated amid rising geopolitical divisions and debt concerns.
While some analysts warn of profit-taking or potential short-term corrections if macro conditions stabilize, the broader consensus remains bullish. Structural demand from central banks, declining trust in fiat currencies, and geopolitical unpredictability continue to support the case for gold.
Note: The above article is for informational purposes only. Gold prices are volatile and influenced by various unpredictable global factors. Please consult a financial advisor before making any investment decisions.
