The dramatic rise of gold in 10 items

With gold surpassing $4,000 an ounce, the question "how much longer?" began to be asked. Investment bank Goldman Sachs predicted that $4,900 could be reached by the end of the year. In 1971, in a move remembered as the Nixon Shock, the US announced that it was abandoning its promise to give one ounce of gold to every $35 earner, thus hammering the final nail in the coffin of the Bretton Woods system. However, despite oil shocks and high inflation in the 1970s, gold maintained its appeal as a "safe haven" and continued to rise until 1980. However, with high interest rates and tight monetary policies in the 1980s, gold entered a period of "interregnum," and it remained in a prolonged recession until the 21st century.

It's a twisted reality of capitalism that bad times in the world are precisely the crossroads that bring joy to gold investors. Indeed, gold surpassed the $1,000 threshold during the 2007-2008 Global Financial Crisis, $2,000 during the Covid pandemic, and $3,000 on the eve of Trump's tariff announcement. Then, in just six months, it reached $4,000. While gold isn't as liquid as cash, it possesses all the same qualities as a medium of exchange and storage, as well as a unit of account. It's a precious metal traded globally, bought and sold like a stock or bond, and while it doesn't directly yield a return, it retains its allure with its drive for capital gains.

So, what are the reasons for this sharp rise ? Given the difficulty of providing a concise answer to this perplexing question, we'll attempt to find an answer using the following 10 points.

1) Neoliberal policies implemented during the capitalist globalization process have further widened income and wealth gaps in all countries. The wealthiest 1 percent of the world has a minimum net worth of $13.7 million. This group allocates its money among various asset groups. Gold also benefits from this portfolio diversification. Like any commodity with a very slow supply growth but rapidly accelerating demand, gold has a long-term upward trend. The gold market's size is around 1/200th of the global stock market and 1% of the bond market. Institutional investors, particularly pension funds and insurance funds, are increasingly including even a limited amount of gold in their portfolios, driving up prices.

2) Following its invasion of Ukraine in 2022, the US, as is well known, froze Russia's financial assets. The escalating struggle for global hegemony between the US and China has further fueled feelings of insecurity. Geopolitical fault lines around the world are poised to rupture at any moment. In such a climate, central banks have begun to prioritize gold in their portfolios. Central bank reserves currently hold approximately 37,000 tons of gold, 639 tons of which belong to the Central Bank of the Republic of Turkey (CBRT). The weight of gold in the reserves of members of the wealthy club, such as the US, Germany, France, and Italy, was already around 70 percent. In the last three years, countries in the Global South have increasingly concentrated on gold. Despite recent purchases, only 10 percent of China's reserves consist of gold. There is still significant potential to increase this weight.

3) Trump's tariff announcements on April 2nd, the day he declared liberation day, and the continued negotiations and impositions are also fueling unease. His unwavering commitment to the territories of his neighbors, including Canada and Mexico, his relentless repetition of crude imperialist rhetoric, and his recent announcement of plans to invade Venezuela are fueling the desire to seek refuge in gold as a "safe haven." While gold prices had stabilized somewhat towards the end of last week, once again reaching below $4,000, Trump's new trade threats against China have pushed gold back above $4,000.

4) The highlighted customs duties pose a risk of directly impacting prices. In fact, almost none of the metropolitan capitalist countries are meeting their 2% inflation target. Furthermore, the disruption of supply chains due to geopolitical disruptions and the tendency to increase costs of reshoring production domestically also carry the potential to drive up inflation. High inflationary periods generally trigger a flight from money to goods, particularly gold. This familiar scenario is playing out today.

5) The global economy is in a cycle of interest rate cuts. In the US, in particular, the Fed appears poised to continue interest rate cuts in the coming period, urged by Trump. The rising interest payments resulting from excessive public debt also reinforces dovish positions, particularly those favoring cuts. This development indirectly gives the precious metal a comparative advantage in the competition with gold, which has no direct interest rate return. The devaluation of the dollar due to low interest rates also lowers gold prices in other currencies, whet investment appetite.

6) The widespread use of gold in manufacturing, particularly in high-technology sectors, is driving demand. It currently accounts for 15 percent of global gold demand. Also known as "aurum," meaning "shining dawn," gold's corrosion-resistant, corrosion-resistant properties, conductive qualities, and ease of processing make it invaluable for electronic devices. Smartphones, computers, semiconductors, and automotive spare parts all contain gold in some form. While the rise of gold has tech companies searching for alternatives to reduce costs, industrial use is currently contributing to the acceleration of gold prices.

7) Individual investment in gold is facilitated by investment funds, particularly exchange-traded financial assets called ETFs. According to the World Gold Council, gold ETFs have seen $60 billion inflow since the beginning of 2025, including $13 billion in September alone. Investing in gold through ETFs offers advantages due to the absence of storage costs, ease of liquidity, and relatively low transaction costs.

8) It's also possible to take positions in gold through derivative instruments, both for hedging and speculation. Leveraged trading can also be done in these markets by depositing collateral. This opportunity can yield substantial profits in a short time, or it can cause your money to evaporate suddenly. However, with gold rising, these markets are proving to be a tempting option. According to the CME Group in Chicago, the world's largest derivatives exchange, $108 billion worth of gold futures contracts are traded daily, totaling 27 million ounces at a price of $4,000.

9) China and India are the two fastest-growing economies in the world in recent years. Gold is a common investment tool in both countries, where populations are steadily increasing in wealth. Demand for gold increases, particularly during wedding seasons. Conversely, Japan and France, the world's fourth and seventh-largest economies, are experiencing regime crises. Power blocs are disintegrating, and governments remain elusive. With public debt already reaching its limit, it seems impossible to secure a vote of confidence without promising a high budget deficit. The turbulent times these countries have been experiencing in recent weeks have triggered a shift away from risky assets and toward gold, considered a safe haven.

10) In stock markets, there's a phenomenon called the "momentum effect," whereby the upward (downward) tendency is strengthened by the expectation that the price of an asset whose price is rapidly rising (or falling) will continue. Individual investors, in particular, are driven by FOMO (fear of missing out), a fear of missing out, and are eager to jump on the train as quickly as possible. In this sense, gold has recently emerged as the most appealing investment option, with the appetite of rookie investors also contributing to the upward momentum.