Crawley (Australia), Feb 26 – The price of gold has surged to an all-time high, surpassing $2,900 per ounce this month, continuing its strong upward trajectory. Since the beginning of 2025, gold has gained 12%, significantly outperforming the US stock index S&P 500, which has risen 4%, and Australia’s ASX 200, which has edged up just 2%.
This rally follows a remarkable 27% surge in 2024—the highest annual increase in 14 years. Analysts attribute the latest surge to a combination of rising inflation fears, increased central bank purchases, and geopolitical uncertainty, particularly in response to policy shifts under US President Donald Trump.
Key Drivers of Gold’s Rally
Both supply and demand dynamics influence gold prices. While supply—mainly from mining and recycling—remains relatively stable, demand fluctuates across four primary sectors:- Jewelry (50% of total demand in 2024)
- Technology and industrial use (5%)
- Investment (25%)
- Central bank reserves (20%)
Safe-Haven Demand and Inflation Hedge
Gold is traditionally considered a safe-haven asset, sought after during economic turmoil and geopolitical crises. Past surges in gold prices have coincided with major global events such as the 9/11 attacks (2001), the global financial crisis (2008), and the COVID-19 outbreak (2020).Gold’s reputation as an inflation hedge has also made it more attractive in light of rising concerns over currency depreciation. Unlike fiat money, which loses value over time due to inflation, gold maintains purchasing power, making it a preferred asset in economic distress.
Central Bank Buying at Historic Levels
A significant factor behind gold’s sustained rally is the continued accumulation by central banks worldwide. Governments have shifted their reserves from US dollars to gold in response to global financial instability. The freezing of Russia’s foreign currency reserves following its 2022 invasion of Ukraine heightened concerns about reliance on foreign-held assets, prompting record central bank gold purchases:- 2022: 1,082 tonnes (record high)
- 2023: 1,051 tonnes (second highest in history)
- 2024: 1,041 tonnes
Geopolitical Uncertainty and Economic Concerns
The re-election of Donald Trump has intensified concerns over inflation and geopolitical stability. His administration’s threats of new tariffs and a potential trade war have fueled investor anxiety, increasing gold’s appeal. Additionally, global markets remain cautious as the US reassesses its international alliances, adding to economic unpredictability.Historically, gold prices have reacted to inflationary pressures and geopolitical risks ahead of major economic downturns. While the exact reasons behind gold’s record-breaking levels in 2025 remain unclear, the surge signals potential turbulence in the global economy.
As uncertainty looms, investors and central banks continue to turn to gold as a reliable store of value, reinforcing its position as a critical asset in times of economic distress.
Last updated by a enewsx:
