The cost of gold has reached an unprecedented peak as the demand for this valuable metal remains robust amidst global economic instability.
As reported by the BBC, the spot price of gold reached $3,508.50 per ounce early on Tuesday, continuing its upward trajectory, which has seen an increase of nearly one-third this year.
Gold is regarded as a safer investment during periods of economic uncertainty, and its price surged earlier this year following US President Donald Trump’s announcement of extensive tariffs that have disrupted global trade.
Experts suggest that the price has also been bolstered by anticipations that the US central bank will lower its key interest rate, thereby making gold an even more appealing option for investors.
Adrian Ash, the director of research at BullionVault, informed the BBC’s Today programme that the increase in gold prices over recent months is primarily attributed to Trump and “what he’s done to geopolitics [and] what he’s done to global trade.”
“It was indeed the US election last year that truly ignited this trend,” he remarked.
Analysts also point to concerns regarding the autonomy of the US central bank, the Federal Reserve, as another element influencing the gold price.
Trump has persistently criticized the chair of the Federal Reserve, Jerome Powell, and has recently attempted to dismiss one of its governors, Lisa Cook.
Derren Nathan from Hargreaves Lansdown stated that it was Trump’s “efforts to undermine the independence of the Federal Reserve Bank” that were “fueling renewed interest in safe haven assets such as gold.”
On Monday, Christine Lagarde, the head of the European Central Bank, cautioned that if Trump were to compromise the independence of the Fed, it would pose a “very serious danger” to the global economy.
She indicated that if the Fed were compelled to react to Trump’s political maneuvers, it would have a “very concerning” effect on economic stability in the US, and consequently, on the rest of the world as well.
Mr. Ash remarked that when gold prices rise due to investor interest, it is typically moderated by a decrease in purchases from China and India – the two largest markets for gold jewelry.
However, he noted that this time, gold continues to attract demand in China and India, as jewelry buyers are opting to purchase investment gold products such as bars or coins instead of withdrawing from the market during periods of elevated prices.
The overall increase in gold prices is also attributed to a variety of other factors, including Russia’s invasion of Ukraine, which has contributed to a general atmosphere of political uncertainty, according to precious metals analyst Suki Cooper from Standard Chartered.
She further stated that this year, the effects of shifting trade policies on inflation and supply chains have also contributed to the rise in gold prices.
“Gold has received additional support from the weakness of the USD [US dollar] earlier in the year, as it remains the preferred safe haven,” she concluded.
