Gold Hits Record High: Here's What’s Driving The Surge?
Gold is once again grabbing attention across the globe. Recently, gold prices reached an all-time high of USD 3,218 per ounce, rising nearly 37 percent in the last one year. After a brief dip in March—caused by stock market losses and urgent liquidity needs—prices are now climbing steadily again. In India, the price of gold is around Rs 93,380 per 10 grams, with expectations that it may soon cross Rs 1,00,000.
Why Are Investors Rushing Toward Gold?
Several global factors are making gold an attractive investment:
Bond Market Shaken by Trump’s Tariff Move: Traditionally, US treasury bonds are considered one of the safest investments. But recent events changed that perception. Former President Donald Trump’s decision to push forward a new tariff regime caused panic in the bond markets. Just before the tariffs were set to kick in, bond prices fell sharply, and yields rose—signaling fear among investors.
The 10-year US bond yield hit 4.5 percent, the highest in six weeks. This led many to shift their funds into gold, which is often seen as a “safe haven” during times of financial uncertainty.
Weak Dollar Adds Fuel to the Fire: The US dollar is losing strength, mainly because of Trump’s protectionist policies. Many global investors are selling off dollar-related assets like stocks and bonds. As a result, the Dollar Index—which tracks the dollar’s value against other major currencies—fell from 109 to below 100, hitting a 3-year low.
A weaker dollar usually boosts gold prices, especially for investors in non-dollar countries, since gold becomes cheaper for them.
Hopes of US Interest Rate Cuts: Inflation in the US is cooling down, and this is raising hopes that the Federal Reserve might cut interest rates in the coming months. The Fed’s current interest rate is between 4.25 percent and 4.50 percent, steady since January.
Experts predict that rates may be cut by 50–100 basis points in the second half of 2025. Lower interest rates make non-interest-yielding assets like gold more appealing.
Global Tensions and Trade War Risks: The ongoing trade war between the US and China is also a major reason behind the gold rush. Both countries have slapped heavy tariffs on each other. China even instructed its banks to reduce dollar purchases, creating more uncertainty in global markets.
This kind of tension often drives investors toward safer assets like gold.
Gold ETFs and Central Bank Demand: Investment in Gold ETFs (Exchange Traded Funds) is also rising. These funds directly track physical gold prices and have become a popular choice. Central banks and big investment houses are increasing their gold holdings, supporting the price rally further.
What’s Next for Gold?
Experts believe that gold may be in the final stage of its current rally. If the Federal Reserve does not cut rates in May or June, or adopts a more aggressive stance, gold prices could come under some pressure. But for now, gold continues to shine bright in uncertain times.
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