The price of gold has risen above $5,000 (£3,659) an ounce for the first time ever, extending a historic rally that saw the precious metal jump by more than 60% in 2025.
It comes as tensions between the US and Nato over Greenland have added to growing concerns about financial and geopolitical uncertainty.
US President Donald Trump’s trade policies have also worried markets. On Saturday he threatened to impose a 100% tariff on Canada if it strikes a trade deal with China.
Gold and other precious metals are seen as so-called safe-haven assets that investors buy in times of uncertainty. On Friday, silver topped $100 an ounce for the first time, building on its almost 150% rise last year.
Demand for precious metals has also been driven by a range of other factors including higher-than-usual inflation, the weak US dollar, buying by central banks around the world and as the US Federal Reserve is expected to cut interest rates again this year.
Wars in Ukraine and Gaza, as well as Washington seizing Venezuelan President Nicolás Maduro, have also helped push up the price of gold.
One of the biggest appeals of gold is its relative scarcity. Only around 216,265 tonnes of the metal have ever been mined, according to the World Gold Council trade association.
That’s enough to fill between three to four Olympic-sized swimming pools. The majority of that was only extracted from the earth since 1950, as mining technology advanced and new deposits were discovered.
The US Geological Survey estimates that another 64,000 tonnes of gold can still be mined from underground reserves, although the supply of the metal is predicted to plateau in the coming years.
“When you own gold, it’s not attached to the debt of somebody else like a bond is or an equity where the performance of a company will drive performance,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
“It’s a really good diversifier in a very uncertain world,” he added.
‘People go to gold’
Gold saw a blockbuster year in 2025, with its biggest annual gain since 1979 as investors flocked to precious metals.
With financial markets spooked by concerns including Trump’s tariffs and fears that artificial intelligence-related stocks are overpriced, gold repeatedly hit new record highs.
Susannah Streeter, chief investment strategist at Wealth Club, an investment platform for the wealthy, said gold “seems to know no bounds” amid ongoing political uncertainty.
“The pile on into the gilded safe haven is continuing with the precious metal racing up higher,” she said.
Streeter pointed to trade tension sparked by Trump’s tariff threat against Canada, saying it had “unnerved investors”.
While economic concerns can help push up the price of gold, it also tends to rise when investors expect interest rates to be cut.
Lower rates typically mean smaller returns for investments such as bonds, so investors look to assets like gold and silver.
The US Federal Reserve is widely expected to cut its main interest rate twice this year.
“It’s inversely correlated because the opportunity cost of keeping the money in a [government bond] is really not worth it anymore, so people go to gold,” said Ahmad Assiri, Research Strategist at Pepperstone.
It’s not just investors who have been buying up gold.
Last year, central banks added hundreds of tonnes of bullion to their reserves, according to the World Gold Council.
“There’s a very clear shift away from the US dollar, which is benefiting gold immensely,” said Kavalis.
The start of this year has seen gold continue to rally but Frappell warns the “news-driven” market could also result in a fall in its price.
“There’s got to be scope for unexpected news that actually might be positive for the world and not necessarily positive for gold,” he said.
But not everybody is buying gold for purely 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 believed to be an auspicious occasion to buy precious metals in order to bring on wealth and luck.
According to the US investment bank Morgan Stanley, Indian households held $3.8tn of gold, equivalent to 88.8% of the country’s gross domestic product (GDP).
Neighbouring China is the world’s largest single consumer market for gold, with many believing that buying it brings good fortune.
“We often see a seasonal uptick in demand around Chinese New Year, which we are seeing at the moment to an extent,” said Kavalis, referencing the upcoming Year of the Horse, which begins in February.
Source: BBC