Why Gold Prices Are Surging: Record Highs & Market Frenzy

As 2025 progresses, gold prices continue to set new records, with no significant decline in sight. In the past one and a half years, the upward trend in gold has remained steady, reflecting increased investor confidence in the precious metal. On Friday, February 14, gold prices surged by Rs 1,300, reaching an all-time high of Rs 89,400 per 10 grams. Silver has also followed a similar trend, reaching new peaks. This consistent rise is driven by the perception of gold as a safe investment, attracting not just individual investors but also large investment firms and central banks worldwide.

Gold Breaks Records 14 Times in 2025

Since the beginning of 2025, gold prices have reached record levels 14 times. On January 1, the price stood at approximately Rs 78,000 per 10 grams, but in just a month and a half, it has risen by more than 14%. The continuous increase in gold prices highlights the preference for safer investment options amid global economic uncertainty.

Central Banks Move Away from the US Dollar

Many of the world's leading central banks are reducing their reliance on the US dollar, choosing to invest in gold instead. China has been at the forefront of this shift, significantly cutting its investments in US Treasury bonds in favor of gold. In 2024, the National Bank of Poland was the biggest gold buyer, purchasing 90 tonnes. India followed closely, acquiring 72 tonnes of gold, as reported by the World Gold Council (WGC).

Gold: A Safe Haven in Uncertain Times

Gold has long been regarded as a reliable asset, especially during economic and geopolitical instability. The ongoing Russia-Ukraine conflict, tensions in the Middle East, and global economic challenges have further reinforced its appeal. In 2024 alone, gold prices surged by 30%, driven by a weakened US dollar and interest rate cuts by the Federal Reserve, marking the strongest performance of gold in the past decade.

Impact of Trump’s Policies on Gold Demand

Donald Trump's recent victory in the US presidential election has further fueled the rise in gold prices. Investors are wary of his trade policies and economic reform strategies, leading to increased demand for gold. His administration’s focus on boosting domestic manufacturing, lowering corporate tax rates, and imposing tariffs on China and other countries has sparked concerns about global economic stability, prompting investors to turn to gold as a hedge.

Inflation and Gold’s Future Trajectory

If inflation in the US rises and the Federal Reserve is compelled to increase interest rates, gold prices may continue their upward trend. Trump’s proposal to impose a 10% tariff on all imported goods, including gold, has intensified market fears, leading to significant gold imports into the New York Comex exchange. Reports indicate that 393 metric tonnes of gold were imported, pushing gold reserves to levels last seen during the early days of the COVID-19 pandemic.

Increased Gold Withdrawals from the Bank of England

The growing demand for gold has also led to a longer waiting period for withdrawals from the Bank of England, increasing from a few days to four weeks. As one of the world’s largest holders of gold reserves, the Bank of England has witnessed a surge in withdrawals between November and December. Simultaneously, major central banks continue to increase their gold purchases, partly due to concerns over US policies under Trump’s leadership. Nations fear potential asset freezes and economic sanctions, similar to the US freezing $600 billion of Russia’s reserves after its invasion of Ukraine.

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