Gold prices are experiencing a surge, driven by a confluence of factors including trade tensions, geopolitical instability, and economic uncertainty. Gold's inverse relationship with the U.S. dollar means that a weaker dollar typically leads to higher gold prices, as gold is priced in U.S. dollars.
Trade tensions, particularly between the U.S. and China, are a significant factor. Concerns about a potential global economic slowdown, especially in major economies like the U.S. and Germany, are also pushing investors toward gold as a safe haven asset.
Central banks worldwide are increasing their gold reserves to hedge against global economic instability. The World Gold Council reported that central banks bought 1,045 tons of gold in 2024, nearly matching previous annual records, as they diversified reserves and reduced reliance on the U.S. dollar. Purchases continued into 2025, with 18 tons in January and 29 tons in February.