Gold’s record run  

The price of gold has hit a new all-time high, breaching $3,300 per ounce for the first time in its history amid rising geopolitical tensions and central bank buying. 

Gold reached a record high of $3,354 per ounce on the morning of 17 April 2025. It has since slipped slightly to $3,323 per ounce at midday. 

This caps a record run for the precious metal, with its price rising strongly since 2017 as uncertainty rose and Russia’s invasion of Ukraine pushed central banks to diversify their reserves. 

In the short term, gold’s sharp uptick has been driven by investors flocking to safe-haven assets after US President Donald Trump unveiled import tariffs into the United States. 

Trump imposed 10% tariffs on imports across-the-board, which were initially coupled with further reciprocal tariffs on the “worst offenders”. 

The additional reciprocal tariffs have since been delayed by 90 days to encourage countries to negotiate with the United States. 

This uncertainty has rocked financial markets, with investors even fleeing the traditional safe haven of the US dollar for the Swiss franc and Japanese yen. 

Since the beginning of April, global uncertainty has hit new highs, with Trump ordering a probe into new tariffs on critical mineral imports into the United States. 

Critical minerals, such as platinum group metals (PGMs), lithium, and manganese, have been spared from Trump’s tariffs so far. 

This has cushioned the impact of the United States’ trade policy on commodity-exporting countries, such as South Africa. 

Investors have piled into gold in the past few weeks, with it being viewed as one of the few assets that is shielded from the shocks to global trade. 

According to a recent Bank of America survey, 73% of respondents believe that the theme of “U.S. exceptionalism” has peaked, impacting markets. 

Nearly half of respondents now view “long gold” as the most crowded trade, overtaking bets on US tech giants for the first time in 24 months.

Gold has risen nearly 26% this year, buoyed by tariff disputes, strong central bank buying, expectations of interest rate cuts, and flows into bullion-backed exchange-traded funds.

Gold’s record run over the past few years can be seen in the graph below, courtesy of Stanlib chief economist Kevin Lings. 

Long-term factors

While uncertainty has pushed the price of gold to new highs in recent weeks, longer-term factors have sustained its rally over the past decade. 

Senior Investment Analyst at Morningstar South Africa, Michael Kruger, said gold has unusually managed to sustain its upward momentum. 

This is because it is increasingly being seen as a way to protect against an equity market decline alongside its traditional role as an inflation hedge, and whether including gold in a portfolio can improve long-term returns or risk-adjusted performance.

Kruger said it is significant that the surge in the gold price from late 2022 to early to mid-2024 came during a period when market participants would not have expected it to rally significantly. 

Gold prices tend to be negatively correlated with real interest rates. The lack of cash flow generated from gold increases the cost of holding it as interest rates rise, and the asset does not produce anything.

The main factor behind the rising price of gold is the increase in geopolitical tensions since the Russian invasion of Ukraine and hostilities in the Middle East. 

A second factor is the unusually large central bank buying of gold, with over 1,000 tonnes of gold purchased, compared to the historical average of around 400 tonnes a year.

The most notable central bank purchases over the past 4 years appear to be coming from the People’s Bank of China, the Reserve Bank of India and the Central Bank of Turkey. 

The recent surge in central bank purchases of gold since 2009 and a rising gold price have grown the precious metal’s share of global international reserves. 

While the US dollar still dominates the share of global international reserves, gold has now surpassed the euro as the second most dominant portion.

Another factor is the increased interest from investors, both retail and institutional, in purchasing gold after its rise in recent years. 

The surge in the price of gold has propelled South African mining stocks to their best monthly performance on record. 

An index of South African mining companies jumped 33% in March, the most in a month since Bloomberg started compiling the data in 1995.

Gold miners are back in favour after the metal hit multiple records this year on central-bank buying and haven appeal amid worries about the escalating trade war.

And the rally may not be over yet, with Wall Street banks, including Goldman Sachs, predicting further gains.