In 2025, gold is experiencing significant price increases, with bullion reaching record highs and expected to achieve its best annual performance since 1979, a year marked by global economic turmoil due to the Iranian revolution.
Gold’s surge is attributed to its traditional role as a safe haven and store of value, a characteristic it has maintained for centuries. Factors such as fears of an economic slowdown and geopolitical tensions, particularly between Russia and NATO, have led investors to seek stability through gold. Additionally, conventional valuation drivers like interest rates, the strength of the dollar, and inflation play a role, as do concerns regarding political actions, including criticism of the US Federal Reserve by former President Donald Trump.
The World Gold Council notes that the scarcity of gold contributes to its status as a reliable store of value. If all gold ever mined were consolidated, it would form a cube measuring approximately 22 meters on each side. The annual rise in gold supply is estimated at 1.7%, indicating that it is not easily debased by government policies or economic shifts. In contrast, other metals, such as copper and platinum, do not serve the same function as they are consumed at high rates based on economic demand.
As of January 1, the price of gold has increased by 43% to $3,760 per ounce, surpassing other major asset classes. Bank of America recently reported substantial inflows into gold investments, although they warned that it is currently “overbought.”
Furthermore, Western investors and speculators have been major contributors to the rising prices. They are influenced by expectations of lower interest rates from the Federal Reserve and concerns over the stability of the US dollar. Central banks, notably China, are also strengthening their gold reserves to reduce dependence on the dollar.
The decline of the dollar throughout 2025 has further augmented gold’s value. Investors have gravitated toward gold amid uncertainties surrounding interest rates and overall market stability.
Prospective gold investors should exercise caution due to the volatility in asset prices. Options for investment include purchasing physical gold, investing in gold exchange-traded funds (ETFs), or buying shares in gold mining companies. However, experts suggest that the market may see corrections or declines if inflation stabilizes or geopolitical tensions dissipate.
Source: https://www.theguardian.com/business/2025/sep/28/bullion-bonanza-why-is-gold-hitting-record-highs