Introduction to Gold Price Surge
Gold prices continue to reach new heights, breaking $5,000 per troy ounce for the first time. This milestone signifies that investors are flocking to assets widely viewed as safe havens amid rising geopolitical tensions. Gold has enjoyed a remarkable rally over the past 12 months, almost doubling in value since this time last year. It is on its biggest rally since the 1970s, with notable gains since 2019, when it was just above $1,280 an ounce.
Why is the Value of Gold Rising So Quickly?
The idea that gold is a safe investment in times of uncertainty goes back many decades. This uncertainty is clearly a driver of the current rally. Recent threats from Donald Trump regarding Greenland have fueled uncertainty, straining US-EU relations. The threats came shortly after the US intervention in Venezuela, where former President Nicolas Maduro was captured by US special forces and removed from office. Geopolitical concerns over the wars in Ukraine and Gaza, as well as economic concerns like doubts over Trump’s trade tariffs and the size of the US national debt, have also played a role.
Growing Doubts About the US Dollar
The weakness of the US dollar itself may increase purchases of gold and silver because it makes purchasing other currencies cheaper. Uncertainty about the dollar also typically leads to further investment in gold, as the metal is often viewed as an alternative to the dollar. In 2025, the US dollar experienced its biggest annual decline since 2017, losing 9.5% against a basket of other major currencies. Many analysts expect this trend to continue in 2026 due to uncertainty about the US economy, investor diversification away from US assets, and the possibility of further interest rate cuts by the US Federal Reserve.
New Investors on the Gold Market
The current rise in gold prices is also due to new investors entering the market for the metal. Demand for gold-backed exchange-traded funds (ETFs) has increased, and more investors from a wider range of backgrounds are looking to invest. The World Gold Council confirmed that gold ETF assets under management doubled in 2025 to an all-time high of $559 billion. The council attributed the rise to rising safe-haven demand and "momentum buying" – when investors buy because the rising price attracts attention, and the weakness of the US dollar.
Outlook for 2026
Most analysts expect gold to continue its record run in 2026. The World Gold Council argues that the outlook for 2026 remains characterized by geopolitical uncertainty, and several outcomes remain possible. If economic growth slows and interest rates continue to fall, gold could see modest gains. However, larger downturns and increasing geopolitical uncertainty could result in larger gains. A successful outcome of Trump’s policies could accelerate economic growth and reduce geopolitical risk, leading to higher interest rates and a stronger US dollar, which would push gold prices lower.
