Gold Smashes $5,000 Mark for First Time Ever
Gold tops $5,000 for the first time as a historic rally accelerates, driven by geopolitical tension, inflation fears, and safe-haven demand.
The price of gold has surged above $5,000 (£3,659) per ounce for the first time, continuing a historic rally that has seen the precious metal's value increase by more than 60% in 2025.
This comes as tensions between the US and NATO over Greenland have fueled growing concerns about financial and geopolitical uncertainty.
US President Donald Trump's trade policies have also rattled markets. On Saturday, he threatened Canada with 100% tariffs if it strikes a trade deal with China.
Gold and other precious metals are considered so-called safe-haven investments, which investors buy during times of uncertainty. On Friday, silver also crossed $100 per ounce for the first time, building on a nearly 150% increase over the past year.
Demand for precious metals has also been boosted by several other factors, including higher-than-normal inflation, a weaker US dollar, purchases by central banks around the world, and expectations that the US Federal Reserve will cut interest rates again this year.
The wars in Ukraine and Gaza, as well as Washington's efforts to detain Venezuelan President Nicolás Maduro, have also helped drive up the price of gold.
One of gold's greatest attributes is its relative scarcity. According to the World Gold Council trade association, only approximately 216,265 tonnes of the metal have ever been mined.
This is enough to fill three to four Olympic-sized swimming pools. Most of this was extracted from the earth only after 1950, as mining technology advanced and new deposits were discovered.
The US Geological Survey estimates that another 64,000 tonnes of gold could still be extracted from underground reserves, although the supply of the metal is expected to remain relatively stable in the coming years. "When you buy gold, it's not tied to someone else's debt, as it is with bonds or equities, where a company's performance dictates the return," said Nicholas Frappell, global head of institutional markets at ABC Refinery.
He added, "It's a really good diversifier in a very uncertain world."
'People flock to gold'
2025 was a banner year for gold, seeing its biggest annual gain since 1979, as investors flocked to the precious metal. Amid financial market jitters fueled by concerns over Trump's tariffs and the overvaluation of artificial intelligence-related stocks, gold repeatedly hit new record highs.
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Susannah Streeter, chief investment strategist at Wealth Club, an investment platform for wealthy individuals, said gold "seems to know no bounds" amid ongoing political uncertainty.
"With the precious metal continuing to climb, investment in this safe haven continues," she said.
Streeter pointed to the trade tensions sparked by Trump's tariff threats against Canada, saying it has "rattled investors."
While economic concerns can help drive up the price of gold, its value also tends to rise when investors anticipate interest rate cuts.
Lower rates typically mean lower returns on investments like bonds, so investors look to assets like gold and silver.
The US Federal Reserve is widely expected to cut its key interest rate twice this year.
"It's inversely correlated because the opportunity cost of holding money in [government bonds] is now not really worth it, so people flock to gold," said Ahmed Asiri, research strategist at Paperstone.
It's not just investors who are buying gold.
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According to the World Gold Council, central banks added hundreds of tons of bullion to their reserves last year.
"There's a very clear shift away from the US dollar, which is benefiting gold greatly," said Kawalis. Gold continued its rally earlier this year, but Frappell warns that a "news-driven" market could also cause its price to fall.
"There has to be room for unexpected news that could actually be positive for the world and not necessarily positive for gold," he said.
But not everyone is buying gold solely for investment reasons.
In many cultures, the metal is purchased during festivals or given as gifts at celebrations such as weddings.
In India, the annual Diwali festival is considered an auspicious occasion to buy precious metals to bring wealth and good fortune.
According to the American investment bank Morgan Stanley, Indian households held $3.8 trillion worth of gold, equivalent to 88.8% of the country's gross domestic product (GDP).
Neighboring China is the world's largest single consumer market for gold, where many believe buying it brings good luck. "We often see a seasonal increase in demand around the Chinese New Year, which we are seeing to some extent right now," said Kowalis, referring to the upcoming Year of the Horse, which begins in February.
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