Gold has solidified its position at the top of safe-haven assets, having recorded a price increase of about 30 percent since the beginning of 2025 amid geopolitical tensions and trade wars.
While many financial markets and currencies have been negatively affected by political tensions, gold prices have recorded new record highs in recent months, with the spot gold price rising about 30 percent since the beginning of the year to date, currently trading at $3,394 per ounce after peaking above $3,500 in April.
Demand for gold
The demand for gold has been fueled by a climate of instability and uncertainty, especially with recent developments in the Middle East, along with a decline in demand for U.S. safe havens.
Intensive purchases of gold by central banks worldwide have enhanced its appeal as a safe haven.
In 2024, central banks added a net 1,044.6 tons of gold to their reserves, marking the third consecutive year that purchases exceeded the 1,000-ton threshold.
Gold's performance against other safe havens
Unlike sovereign bonds or paper currencies, gold carries no counterparty risk; it has intrinsic value, meaning you are not reliant on a government or private entity to fulfill its debt obligations and pay interest coupons.
Even against other safe havens, gold has outperformed since the beginning of the year, with safe-haven currencies like the Japanese yen and Swiss franc rising about 8 percent and 10 percent against the dollar.
Yields on benchmark U.S. government bonds for ten years have decreased by about 19 basis points since the beginning of the year. Yields and prices move inversely in the bond market, meaning that a decrease in yields indicates an increase in prices.
Gold funds
For the first time in history, the assets of U.S. managed gold exchange-traded funds surpassed $190 billion, with the value of these funds' assets rising by about $100 billion over the past two years.
Moreover, the assets of the most famous gold ETF, SPDR Gold (GLD), recently exceeded $100 billion for the first time in history.
Gold is now experiencing its best performance since the 1970s, as economic and geopolitical uncertainty continues to drive demand.