Gold tops $5,000 for first time ever, adding to historic rally

The gold price rose above $5,000 (£3,659) per ounce for the first time, continuing a historic rise that has seen the precious metal rise more than 60% in 2025.

This comes at a time when tensions between the US and NATO over Greenland are contributing to growing concerns about financial and geopolitical uncertainty.

US President Donald Trump’s trade policies also worried the markets. On Saturday, he threatened to impose 100% tariffs on Canada if Canada strikes a trade deal with China.

Gold and other precious metals are seen as safe haven assets that investors buy in times of uncertainty. On Friday, silver rose above $100 an ounce for the first time, continuing last year’s nearly 150% rise.

Demand for precious metals has also been affected by a number of other factors, including higher-than-normal inflation, a weak US dollar, purchases by central banks around the world and the US Federal Reserve being expected to cut interest rates again this year.

The wars in Ukraine and Gaza, as well as Washington’s capture of Venezuelan President Nicolás Maduro, also helped raise the price of gold.

One of gold’s biggest appeal is its relative scarcity. Only around 216,265 tonnes of the metal have been mined so far, according to the World Gold Council trade association.

This amount is enough to fill 3 to 4 Olympic swimming pools. A large part of them has been mined from the ground since 1950 due to the advancement of mining technology and the discovery of new mineral deposits.

The US Geological Survey estimates that although metal supplies are expected to stagnate in the coming years, another 64,000 tons of gold can still be extracted from underground reserves.

“When you own gold, it’s not tied to someone else’s debt, like a bond or a stock, where a company’s performance will drive performance,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.

“It’s a really good diversification tool in a very uncertain world,” he added.

Gold has a blockbuster year in 2025, with its biggest annual gain since 1979 as investors flock to precious metals.

Gold has consistently hit new record highs as financial markets spooked by concerns including Trump’s tariffs and fears that AI-related stocks are overpriced.

“I think a lot of this is due to the extreme uncertainty around U.S. policy,” said Nikos Kavlis of research consultancy Metals Focus.

Although economic concerns help push the price of gold up, gold prices also tend to rise when investors expect interest rates to be lowered.

Lower rates often mean smaller returns for investments like bonds, so investors turn to assets like gold and silver.

The US Federal Reserve is expected to cut its key interest rate twice this year.

“This is inversely proportional because the opportunity cost of keeping money in one place is [government bond] “It’s really not worth it anymore, so people are turning to gold,” said Pepperstone Research Strategist Ahmad Assiri.

Investors aren’t the only ones buying gold.

Last year, central banks added hundreds of tonnes of bullion to their reserves, according to the World Gold Council.

Central banks of China, Poland and Azerbaijan were among the leading buyers in 2025.

“There is a very clear move away from the US dollar, which has greatly benefited gold,” Kavalis said.

The beginning of this year saw gold rally, but Frappell warned that a “news-driven” market could also cause a decline in the price of gold.

“There should be room for unexpected news that may actually be positive for the world but not positive for gold,” he said.

However, not everyone buys gold just for investment purposes.

In many cultures, metal is purchased during festivals or given as gifts at celebrations such as weddings.

The annual Diwali festival in India is believed to be an auspicious opportunity to purchase precious metals to bring wealth and luck.

Indian households hold a staggering $3.8 trillion worth of gold, equivalent to 88.8% of the country’s GDP, according to US investment bank Morgan Stanley.

Neighboring China is the world’s largest gold consumer market, and many people believe that buying gold will bring wealth.

“We often see a seasonal increase in demand around Chinese New Year, and we are seeing that to some extent now,” Kavalis said, referring to the Year of the Horse that begins in February.