Experts decode the reason why gold prices continuously set records

Gold bars in Incheon, west of Seoul, South Korea. (Photo: Yonhap/VNA)

World gold prices have reached an unprecedented high: 3,227.51 USD/ounce, up more than 20% since the beginning of the year.

Amidst global geopolitical and economic uncertainty, gold has once again asserted its position as the safest financial “safe haven”. What is driving this strong rally?

According to observers, the first push came from US President Donald Trump's controversial tariff measures.

In an effort to protect domestic production and narrow the trade deficit, Mr. Trump imposed retaliatory tariffs on a range of imported goods, causing a wave of violent fluctuations in global financial markets.

Frank Watson, precious metals analyst at trading platform Kinesis Money, said the fact that precious metals are not subject to tariffs is a big plus. “Because gold is not considered a core industrial product, it avoids the tariff spiral,” he explained.

After hitting a peak earlier this month when President Trump announced new tariffs, a wave of sell-offs amid a stock market crash sent gold prices into a minor correction. However, by mid-week, when President Trump unexpectedly postponed tariffs on dozens of countries (except China), gold prices quickly recovered.

In addition to political factors, the sharp weakening of the US dollar against other major currencies also contributed significantly to the increase in gold prices. When the greenback loses value, gold - which is priced in US dollars - becomes more attractive to international investors.

In addition, concerns that a global trade war will slow economic growth are leading markets to expect the US Federal Reserve (Fed) to continue cutting interest rates. This puts further pressure on the US dollar and reduces the appeal of US government bonds, which have traditionally been a safe haven.

“People want to have something tangible that they can hold,” said John Reade, a strategist at the World Gold Council. While not everyone has the opportunity to buy gold bars, gold jewelry remains a popular choice.

Gold does not corrode, does not lose value over time and does not require trust from the government or banking system, which makes this metal the optimal "safe" to store value in the eyes of investors.

Another factor that cannot be ignored is the gold hoarding fever from central banks. According to data from the World Gold Council, in 2024, central banks around the world bought more than 1,000 tons of gold, the third consecutive year of maintaining a record high level of purchases.

"This trend started after the outbreak of the Russia-Ukraine conflict and the West's seizure of Russia's foreign exchange reserves," said Charlie Morris, an expert at research organization ByteTree. Since then, many countries have begun to view gold as a strategic hedge, used to stabilize currencies and as collateral for loans.

The conflict in Gaza following tensions in Ukraine also increased global geopolitical risks, a strong factor supporting investment demand for gold.

According to vietnamplus.vn

Source: https://baodanang.vn/kinhte/202504/chuyen-gia-giai-ma-ly-do-gia-vang-lien-tiep-lap-ky-luc-4003492/