The gold price soared to $5,500 per ounce on Monday for the very first time, before briefly falling back. Silver prices also rose, with an ounce trading for around $98. This is up from $38 a year earlier. As global uncertainties continue, investors are turning to precious metals for a haven.
Investors are wary of Trump’s policies
US President Donald Trump’s trade policies are causing market uncertainty. The uncertainty caused by his tariffs against multiple countries, and the threats he made over Greenland has pushed investors towards gold.
Emma Wall, Chief Investment Strategist at Hargreaves Lansdown says that gold jumps whenever the world is chaotic. Precious metals have become more appealing due to the ongoing tensions in Europe, China and the Middle East as well as US political instability.
Demand for Geopolitical Conflicts Increases
Gold prices have risen due to the wars in Ukraine, Gaza and Venezuela. The geopolitical developments eroded investor confidence in the US Dollar, leading them to look for security in metals. Bloomberg’s chart shows that gold and silver are up by 80%, respectively 214% since a year earlier. The US dollar index is down 10%.
Central Banks and New Buyers Help the Rally
Gold is being bought by central banks to decrease their dependence on the US Dollar. Gold is a safe haven for nations who are worried about their US dollars being frozen. China is the top buyer, both by investors and individual buyers. Tether and other digital currency companies have purchased large amounts of reserves to add to the trend.
What is the Reason for Gold Price Drop?
Gold remains attractive to analysts due to geopolitical risk, tariffs and scarcity. Nicholas Frappell, of ABC Refinery, emphasizes the fact that gold’s value is independent of debts and company performance.
What to Take Away
Gold’s volatility in recent years shows its sensitivity to economic and political developments. Gold is still a safe investment, even though prices fluctuate.
