Over the past two years, the value of gold has more than doubled. This is related to the so-called "devaluation trading," where investors begin to avoid currencies and treasury bonds. Since the beginning of the current year, the price of gold has increased by more than 17%. Recent sell-offs in the Japanese bond market demonstrate how investors are starting to turn away from large government expenditures.
The price of gold has risen by about 2%, reaching $5085, which is linked to the weakening of the dollar, in turn increasing demand for the metal. The U.S. dollar index has decreased by nearly 2% over the last six trading days, and the possibility that the U.S. may assist Japan in strengthening the yen raises concerns about the independence of the Federal Reserve and Trump's unstable policies.
The recent rise in precious metal prices is also driven by purchases from central banks and increased demand for these assets as safe havens.
Silver has also shown significant growth, increasing by more than 5% and reaching a record above $100 per ounce due to high demand from retail buyers in cities like Shanghai and Istanbul.
“Recent actions by the Trump administration — criticism of the Fed, the threat of annexing Greenland, and military intervention in Venezuela — have caused panic in the markets. For investors seeking to cope with this uncertainty, gold as a safe-haven asset has become particularly attractive,” Bloomberg reports.
Over the weekend, Trump threatened Canada with 100% tariffs on all exports to the U.S. if Ottawa strikes a trade deal with China, escalating tensions in bilateral relations. Political uncertainty in the U.S. also persists, as Senate Democratic leader Chuck Schumer has promised to block a major budget package if Republicans do not abandon funding for the Department of Homeland Security, increasing the likelihood of a partial government shutdown.
The rising national debt in developed countries is also becoming an important factor contributing to the rise in gold prices. Some long-term investors, confident that only inflation can lead to financial stability, are actively buying gold to protect their purchasing power.
“Most geopolitical uncertainties caused by Trump's actions are unlikely to be resolved anytime soon,” noted Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp Ltd. This suggests that “gold will remain attractive for investment in the coming months and even years, although investors should be prepared for periodic corrections after significant growth over the past year.”
