- Gold rose above $2,775 per ounce, climbing back to three-month highs.
- The precious metal is within touching distance of its all-time high of 2790.07 in October 2024.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’Gold is shining as a ‘safe haven’ asset, with investors seeking shelter to weather the storm of unpredictability. With US President Donald Trump still dangling the threat of tariffs over near neighbours and far foes, there are concerns that they could push up US consumer prices, increase inflation, and lead to interest rates staying higher for longer. The Federal Reserve has nodded to these concerns, with a note of caution emanating from the bank after the decision to keep interest rates on hold. The recent mention of inflation making progress towards the 2% target was dropped, a move seen as highly significant in the current climate. Gold is seen as a hedge against inflation, and a safer refuge amid volatility. The gyrations on stock markets, caused by progress made by Chinese AI rival DeepSeek, which has potentially threatened the dominance of Silicon Valley, may also have helped gold’s glittering run upwards this week.
The rise in gold prices over the past year has also been helped by buying from China, particularly its central bank, in an attempt to diversify their reserves away from the US dollar. There are also concerns that governments across the world continue to run up high levels of debt, which is associated with a rise in long-term inflationary expectations. Movements in the dollar may also affect its future trajectory. And edging down in the value of the currency, makes gold slightly cheaper for overseas buyers. China has been bulk buying gold as well, which has helped support the higher prices, a trend which doesn’t look set to wane any time soon.
Geo-political uncertainty is also adding to gold’s appeal. While the truce is holding in Gaza for now, tensions are still high in the Middle East and the war in Ukraine remains intractable. In an uncertain world, gold remains in demand and fresh records are within sight. But investors still should be wary, as investing in gold is far from a one-way bet. It’s often risen in times of economic or political crisis, it has also a history of losing its lustre. After a strong run in the ‘70s and early ‘80s, it took over 23 years to get back to its 1983 high. Given the volatility associated with gold, it usually should only make up a small portion of a diversified investment portfolio.’’
