Gold has been a safe haven asset in times of political and economic uncertainty for centuries. Gold is positioned as a high-value, reliable item, easy to transport and sell anywhere. Therefore, gold brings a sense of safety in the context of instability.
The gold fever has boosted gold prices to a new record in 2025, extending a streak of intense gold price increases that have lasted since last year.
Currently, the world gold price has surpassed 3,500 USD/ounce to reach an all-time high. Gold prices hit a record high driven by the possibility of the US cutting interest rates.
For modern investors, the appeal of gold is mainly due to stability and liquidity.
Gold's safe haven status has also been raised as the Trump administration's trade agenda has led to confidence in other conventional safe-haven channels, such as the US dollar and government bonds, shaken.
Historically, when the US dollar strengthens, gold prices often fall, and vice versa. The USD hit a three-year low in July 2025 and remained low through the end of August.
In addition to market fluctuations, gold ownership has been deeply ingrained in the cultures of India and China, two of the world's largest gold markets, in which jewelry and gold bars have been passed down through many generations as symbols of prosperity and safety. Indian households own about 25,000 tons of gold, more than five times the amount of gold stored in US Fort knox reserves.
Traditional gold buyers are known to be price sensitive. When financial investors are less interested in gold, buying or selling less, buyers of gold jewelry and gold bars will take advantage of buying because the price is cheap, thereby creating a fulcrum to prevent prices from falling too low.
Gold prices have increased rapidly since the beginning of 2024, driven by large central bank purchases, especially in emerging markets, in an effort to reduce dependence on the US dollar.
Central banks have been net buyers for the past 15 years, but the pace of gold purchases has doubled after the Russia-Ukraine conflict broke out. The freezing of money sent abroad by the US and its allies by the Russian central bank has highlighted the risk of foreign currency assets falling under sanctions.
According to the World Gold Council, in 2024, central banks have purchased more than 1,000 tons of bullion for the third consecutive year and are holding about a fifth of the total amount of gold exploited. The buying rate then slowed down somewhat due to high gold prices.
