Gold Reaches Historic High as Global Uncertainties Persist

Gold prices hit USD 3,000 per ounce, highlighting its status as a safe-haven asset amid economic uncertainties. Driven by increased central bank purchases and geopolitical factors, gold's record surge reflects growing investment demand from emerging markets and rising concerns over trade wars and global risks.

Gold prices have soared to an unprecedented USD 3,000 per ounce, reinforcing its reputation as a secure asset during turbulent economic times. John Reade, Senior Market Strategist at the World Gold Council, noted that gold has consistently thrived in risk-averse settings, escalating from USD 1,000 during the financial crisis to USD 2,000 throughout the pandemic, and now exceeding USD 3,000 as global uncertainties grow.

Reade stated, "Gold's milestone of USD 3,000 per ounce emphasizes its role as a safe haven during uncertain times. From USD 1,000 in the financial crisis to USD 2,000 amid the pandemic, gold has proven its resilience in risk-off environments, aligning with returns from other asset classes since 1971." He further explained that since 2022, gold has decoupled from US interest rates and the USD, as central banks have doubled their gold acquisitions and investment demand from emerging markets has surged.

A major factor propelling gold's ascent is the evolving dynamic of central bank acquisitions. Since 2022, central banks have doubled their gold purchases, amassing over 1,000 tons annually, with 1,045 tons bought in 2024 alone. Reade links this rise to geopolitical pressures like de-dollarisation, inflation fears, and economic sanctions encouraging central banks to bolster their gold holdings.

Reade commented, "Geopolitical influences are behind the increase, such as de-dollarisation, sanctions, and inflation concerns. As global divisions widen, central bank buying will remain a crucial demand pillar, influencing the market's long-term trends." Additionally, investment demand from emerging markets like China and Turkey has surged due to stagnant property markets and currency depreciation concerns, while in India, reduced import duties have spurred gold purchases.

The recent uptrend has also been intensified by swelling economic risks, particularly uncertainties around US tariffs and trade wars. As global market volatility mounts, investors gravitate toward gold as a crucial portfolio diversifier. Reade asserted, "The ongoing rally is fueled by unpredictability regarding US tariffs and the emerging trade war, escalating economic risks and market volatility, thereby increasing investor interest in gold as a vital diversifier."

(With inputs from agencies.)