Gold has always been a symbol of wealth and security, but in recent years, it has reclaimed its role as the ultimate safe haven. While Warren Buffett, the legendary investor, has long dismissed gold as an asset that “will never produce anything,” recent trends suggest that even the most steadfast critics might feel a tinge of regret as gold continues its remarkable ascent.
Since late 2023, gold has been the standout performer in the financial markets, with its price surging nearly 37% to reach just shy of $3,100 per troy ounce, setting new lifetime highs with astonishing regularity. This surge builds on a 30%+ gain in 2024, driven by central banks and institutional investors scooping up gold in unprecedented quantities.
Key Drivers of Gold’s Surge
The rally in gold prices has been fueled by a combination of factors, including rising global instability, geopolitical tensions, and the effects of trade wars, particularly with tariffs being imposed by major economies such as the United States. As global growth prospects dim due to these tensions, investors have flocked to gold as a hedge against both inflation and economic uncertainty. The most recent trigger for the gold rush has been the looming threat of additional tariffs, scheduled to be announced by the U.S. President in April 2025, which has led to another surge in gold prices.
Gold’s role as a passive inflation hedge has evolved, and it is now increasingly seen as a safe store of value amid ongoing global crises. This new role is reflected in the rising demand for gold from institutional investors, including central banks and capital-protection funds. As geopolitical conflicts continue to weigh on global stability, gold’s appeal as a safeguard against economic and political volatility has only grown stronger.
Central Banks and ETFs Fuel Gold Demand
A significant portion of gold’s recent surge has been driven by central bank purchases, which have reached record levels in recent years. In the past three years alone, central banks have added more than 3,175 tons of gold to their reserves, a trend that shows no signs of reversing. In 2024, the Reserve Bank of India (RBI) alone bought nearly 73 tons of gold, contributing to the global shift towards gold as a central bank asset.
Additionally, exchange-traded funds (ETFs) have played a critical role in driving up demand for gold. So far in 2025, ETF gold purchases have climbed by the equivalent of 128 tons, bringing global ETF ownership of gold to around 2,710 tons by March. This marks a significant departure from the cautious approach of the pre-Covid era, with investors increasingly turning to gold as a safer, more reliable asset.
Long-Term Outlook for Gold
Looking ahead, the trend of strong gold demand is expected to continue. The World Gold Council (WGC) has indicated that central bank buying will likely surpass the long-term trend of 500 tons in 2025, which should continue to have a positive impact on gold prices. The ongoing challenges posed by tariffs, trade disruptions, and interest rate dynamics suggest that gold will remain a favored asset for those seeking protection against economic instability.
As the WGC notes, “No central banker ever lost his job for buying gold.” This sentiment is echoed by the fact that central bank purchases have more than offset a slowdown in consumer demand for gold, underscoring the metal’s resilience and enduring appeal as a safe haven.
Conclusion
Gold’s recent performance has confirmed its long-held status as a crisis asset. Over the past half-century, gold has often been the go-to asset during times of extreme global economic crises, from the 1980 oil crisis to the 2008 financial meltdown. Even in nominal terms, it took nearly three decades for gold to surpass the peak prices it reached during the 1980 oil crisis. Today, as we face a new wave of global uncertainties, it is clear that gold’s millennium-old credentials as the safest store of value remain unshaken.
In times of volatility, as central banks and institutional investors continue to buy gold at record rates, it seems that gold will indeed remain “king” for the foreseeable future, cementing its position as a vital hedge against risk and a reliable store of wealth.
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