Gold prices surged to a record on Wednesday, driven by safe-haven demand as investors sought security amid escalating global economic and political tensions. The precious metal has climbed more than 50% since the start of the year, extending a rally fuelled by uncertainty in multiple markets.
Factors driving the rally
Gold’s reputation as a reliable store of value has strengthened amid geopolitical crises, including the wars in Ukraine and Gaza, prompting investors to seek refuge in the metal. Concerns over the US government shutdown and expectations of further Federal Reserve rate cuts have weakened the US dollar, making gold more attractive.
Market experts also point to worries about the Fed’s independence, following repeated criticism from US President Donald Trump over interest rate policies, which has added to investor caution. Rising government debt and unpredictable tariffs introduced under the Trump administration have also made other investment avenues less stable.
Richard Flax, Chief Investment Officer at wealth manager Moneyfarm, said, “Investors continue to bid up the price of gold, with the precious metal rising more than 50% year to date and nearly 12% in September alone — one of the strongest monthly performances on record.”
Central banks and ETFs lead purchases
According to the World Gold Council (WGC), global gold demand rose 3% in the second quarter, reaching 1,249 tonnes, driven by geopolitical uncertainty and price momentum. Central banks have continued to buy gold at elevated levels, while exchange-traded funds (ETFs) offering gold exposure without trading futures have attracted significant inflows.
Flax added, “While early gains this year were driven by tariff-induced volatility, recent momentum has been fuelled by strong sentiment and record inflows into gold-backed ETFs.”
Impact on jewellery and other markets
Rising gold prices have curbed jewellery demand, as costs have surged. Meanwhile, other assets are also performing strongly: Bitcoin reached a new high of $126,000, and major stock indices in New York, London, and Tokyo have set fresh records.
Chris Beauchamp, Chief Market Analyst at trading platform IG, noted, “As gold continues its surge, investors are seeking diversification, even with stocks at record highs, indicating ample liquidity in global markets.”
Conclusion
Gold’s record-breaking rally highlights its enduring status as a safe-haven asset amid global uncertainty. With continued geopolitical tensions, economic unpredictability, and central bank activity, analysts expect strong investor interest in gold to persist, even as other markets see historic gains.