By: Shatha Kalel
The price of gold has reached a record high of around $4000 per ounce, continuing its remarkable rise throughout the year. The precious metal, often seen as a symbol of stability and safety, has surged by nearly a third in 2025, reflecting widespread concern over global economic and political instability.
Drivers Behind the Surge
Analysts attribute the rally to several overlapping factors, the most significant being global trade tensions and policy uncertainty in the United States. The introduction of new U.S. tariffs under President Donald Trump disrupted global trade flows and raised fears of a deeper economic slowdown. This uncertainty pushed investors away from riskier assets such as equities and currencies toward gold, which is widely viewed as a safe-haven investment during times of crisis.
In addition, expectations that the U.S. Federal Reserve will cut interest rates have made gold even more attractive. Lower rates reduce the opportunity cost of holding non-yielding assets like gold, prompting many investors to diversify their portfolios. Concerns about the independence of the Federal Reserve have further fuelled this movement. Trump’s repeated attacks on the Fed’s leadership and attempts to influence its policy decisions have raised questions about the long-term stability of U.S. monetary governance.
Global Impacts and Investor Behavior
The rise in gold prices has ripple effects across global markets. For emerging economies such as China and India—traditionally the largest gold consumers—the trend is unusual. In past cycles, rising gold prices discouraged jewellery buying. However, this time demand has remained robust as consumers in these countries have shifted toward investment-grade gold products like bars and coins.
Experts, including Adrian Ash of BullionVault and Suki Cooper of Standard Chartered, note that geopolitical risks such as Russia’s invasion of Ukraine and shifting trade policies have also supported the rally. The weakening of the U.S. dollar earlier in the year has further enhanced gold’s appeal, since the metal becomes cheaper for holders of other currencies.
Economic Implications
While the gold boom reflects investor confidence in the metal’s long-term value, it also signals anxiety about the global economy. Rising gold prices often correspond with declining trust in political and financial systems. As European Central Bank President Christine Lagarde warned, any attempt to politicize the U.S. Federal Reserve could pose a “very serious danger” to global financial stability.
A sustained rally in gold can increase inflationary pressures, disrupt commodity markets, and strain consumer spending in countries that rely heavily on gold imports. At the same time, it provides a hedge for central banks and investors seeking protection from currency volatility and geopolitical risks.
Conclusion
Gold’s latest record underscores a broader truth: when uncertainty rises, so does the allure of safety. The current surge reflects not just market trends but a global sense of unease—over trade wars, political interference, and fragile monetary policy. If instability continues, gold may remain one of the few assets investors trust to hold its shine amid an increasingly unpredictable world.
Economic Studies Unit / North America Office
Al-Rabetat Center for Research and Strategic Studies