Ask Onix
Gold hits record high above $5,000 an ounce
Gold prices soared to an unprecedented $5,000 per ounce on Monday, capping a year-long rally that saw the precious metal climb over 60% in 2025. The milestone reflects deepening investor unease over geopolitical tensions and economic instability.
Drivers behind the surge
Escalating trade disputes, including U.S. President Donald Trump's threat to impose 100% tariffs on Canada if it strikes a trade deal with China, have amplified market volatility. Analysts also point to conflicts in Ukraine and Gaza, along with the U.S. seizure of Venezuelan President Nicolás Maduro, as key factors fueling demand for safe-haven assets.
Silver mirrored gold's ascent, breaching $100 per ounce for the first time after a nearly 150% gain in 2024. Central bank purchases, persistent inflation, and a weakening U.S. dollar further bolstered demand. The U.S. Federal Reserve's expected interest rate cuts this year have also reduced the appeal of bonds, pushing investors toward precious metals.
"Gold is a strong diversifier in an uncertain world. Unlike bonds or equities, its value isn't tied to another entity's debt or performance," said Nicholas Frappell, global head of institutional markets at ABC Refinery.
Supply constraints and cultural demand
The World Gold Council estimates that only 216,265 tonnes of gold have ever been mined-enough to fill three to four Olympic-sized swimming pools. The U.S. Geological Survey projects another 64,000 tonnes remain in underground reserves, though output is expected to plateau in coming years.
Beyond investment, gold holds cultural significance. In India, households hold $3.8 trillion worth of gold, equivalent to 88.8% of the country's GDP, often purchased during festivals like Diwali for luck and prosperity. China, the world's largest gold consumer, sees similar demand spikes around Chinese New Year, which begins in February.
Market outlook and risks
While gold's rally shows no signs of slowing, experts warn of potential volatility. "This is a news-driven market," Frappell cautioned. "Unexpected positive developments could reverse the trend."
Investment strategist Susannah Streeter noted that gold's rise is fueled by "ongoing political uncertainty," but its inverse correlation with interest rates means further Fed cuts could sustain the momentum. Meanwhile, central banks continue to stockpile bullion, reflecting a broader shift away from the U.S. dollar.
