Gold prices remained above the $5,000 mark for a second consecutive day on Tuesday, extending the spectacular rally that began last year and has gathered pace throughout 2025.
The precious metal’s strength is underscored by the fact that prices have surged by 87% since the beginning of 2025, highlighting gold’s renewed appeal as a safe-haven asset amid mounting global uncertainty.
Spot gold was up 1.6% on Tuesday morning, trading at $5,092.70 per ounce, after hitting a fresh all-time high of $5,110.50 on Monday.
Trade tensions fuel fresh momentum
The latest rally comes in the wake of renewed tariff threats by US President Donald Trump, who has targeted South Korea, announcing a rise to 25% tariffs on imports of automobiles, timber and pharmaceutical products.
At the same time, market attention has turned to Japan and speculation that the government may intervene to halt the yen’s decline, potentially with support from Washington. Such a move would signal that the US is willing to tolerate a weaker dollar – a development that typically benefits gold.
“The gold rally suggests a significant geopolitical or uncertainty premium is now embedded in prices,” said Christopher Wong of OCBC, noting that the surge reflects persistent geopolitical risk, unpredictable policymaking and waning confidence in the US dollar rather than cyclical factors.
Five forces driving gold’s spectacular rise
According to Business Insider, five key dynamics are powering gold’s record-breaking performance:
1. Trump’s tariff threats
Gold jumped more than 2% on Monday as trade tensions once again unsettled markets, following Trump’s warning that he could impose 100% tariffs on Canada if it signs any trade deal with China.
Gold traditionally acts as a safe haven during periods of geopolitical, trade and currency instability, prompting investors to seek shelter in the metal when fears over disrupted global trade intensify.
The targeting of Canada, alongside Trump’s recent rhetoric towards Europe over the “acquisition” of Greenland, also sparked a brief “Sell America” trade – a sell-off in US assets that has supported gold over the past year.
As gold hit record highs on Monday, the US dollar index fell nearly 1% against major peers, hovering around 96.96.
2. The ‘debasement trade’
Closely linked to the “Sell America” narrative is the so-called debasement trade – a strategy involving a move away from sovereign bonds and fiat currencies.
This theme has dominated markets in 2025 and is expected to remain influential in 2026, as concerns grow over the reliability of traditional safe assets such as government bonds.
Trump’s pressure on the Federal Reserve and Chair Jerome Powell has added to fears of political interference in monetary policy. Investors worry that a more compliant Fed leadership and lower interest rates could fuel inflation and weaken the dollar, further boosting gold.
3. Central bank buying
According to Ben McMillan, CIO at IDX Advisors, central bank purchases have been the single most important driver behind gold’s outperformance in recent years.
“After COVID, when the US printed massive amounts of money, central banks – led by China – literally doubled annual gold purchases while selling US Treasuries,” McMillan told Business Insider.
Central banks are increasingly diversifying away from the dollar, a trend that accelerated after Russia’s invasion of Ukraine and the freezing of Russian dollar reserves, raising concerns about the “weaponisation” of the US currency.
4. Heightened geopolitical risks
Rising geopolitical instability remains at the core of gold’s bullish outlook.
From US actions in Venezuela and the ongoing war in Ukraine to tensions in Iran and strains within NATO, investors face an increasingly fragile global landscape. As long as conflicts persist or escalate, analysts expect gold’s role as a safe haven to strengthen further.
5. Fear of missing out (FOMO)
Finally, FOMO appears to be amplifying the rally.
With gold up 87% since the start of 2025 and 25% since October, the gains have become too substantial for many investors to ignore, drawing fresh inflows and reinforcing upward momentum.
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