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What is it about gold that makes it glimmer even brighter in troubled times? As the precious metal soars to historic peaks, AFP breaks down why investors worldwide continue to see it as a rock-solid safety net.
With global markets rattled by US President Donald Trump’s tariff policies, gold—long considered a safe-haven asset—has taken off on a record-breaking run.
On Friday, the price of gold hit an all-time high of $3,227.51 an ounce, climbing more than 20 percent since the beginning of the year.
A Glimmer Through the Tariffs
“So far, precious metals bullion is exempt from US tariffs and this is probably because they are not seen as core industrial products,” said Frank Watson, senior metals analyst at Kinesis Money, in an interview with AFP.
Trump’s tariffs are designed to support domestic production and shrink the US trade deficit. Since gold isn’t part of the industrial supply chain, it’s escaped the tax net—giving it a surprising boost.
Gold initially surged in early April after Trump announced retaliatory tariffs, but then dipped as investors scrambled for liquidity amid falling stock markets. The metal briefly weakened, only to rebound when Trump unexpectedly paused tariffs for dozens of countries—excluding China.
The Dollar Dips, Gold Glows
The US dollar has slipped significantly against major global currencies in the wake of Trump’s trade moves, adding to gold’s allure.
Gold is “an important risk-management asset held by entities including central banks and financial institutions as well as retail investors,” Watson explained.
With markets jittery over a looming global trade war and economic slowdown, there’s growing speculation that the US Federal Reserve may slash interest rates to prop up the economy—even if tariffs push inflation higher, which usually calls for rate hikes.
Lower interest rates dampen the dollar and US government bonds, diminishing their safe-haven appeal and turning the spotlight back to gold.
Tangible Value in Turbulent Times
Gold’s tangibility is also part of its timeless charm. Even if most people never own a bar of gold, they can still buy gold jewellery—something they can hold.
“People want a tangible asset that they can own,” said John Reade, a strategist at the World Gold Council.
In a chat with AFP, Reade noted that investors and savers tend to turn to gold whenever trust in governments and financial institutions wanes—even if gold doesn’t offer interest or dividends.
“Gold is incredibly rare and doesn’t corrode, making it the ultimate long-term store of value,” added Watson.
Central Banks Fuel the Craze
Central banks remain major players in the gold surge, hoarding bullion to stabilise currencies, hedge against economic shocks, and use as collateral in deals and loans.
In 2024 alone, global central banks added over 1,000 tonnes of gold to their reserves—for the third consecutive year—according to the World Gold Council.
“This move was triggered by the invasion of Ukraine and the subsequent confiscation of Russian reserves,” said Charlie Morris, analyst at investment research group ByteTree.
After Russia’s 2022 invasion of Ukraine, international sanctions froze much of Moscow’s foreign currency reserves held abroad. The ongoing Ukraine war, followed by conflict in Gaza, has only deepened geopolitical tensions—making gold shine even brighter as a hedge against global instability.
