Gold fever grips markets amid global economic volatility

New York’s renowned Diamond District was bustling last month, but the focus of conversation was not on diamonds. Instead, gold has emerged as the key asset on everyone’s mind. Years of economic uncertainty driven by Covid, geopolitical conflicts such as the Ukraine war, and lingering trade tensions initiated during Donald Trump’s presidency have dramatically revived interest in gold.

Walking the crowded streets of West 47th Street, Becky Algozhoeva, a trader at GT Findings, witnessed a surge in gold sales. From coins to ingots featuring the Roman goddess Fortuna, customers are flocking to acquire the metal. According to Algozhoeva, many individuals view gold as the ultimate safe haven in an unstable economic climate. She remarked, “People don’t trust banks anymore. They want something tangible, something they can keep under their pillow. Gold doesn’t go bad—it’s not milk.”

Gold’s price has climbed more than 20% since Trump’s election, with the metal now up by an extraordinary 95% over the past five years. While prices have recently eased after hitting a high of $3,500 an ounce, uncertainty continues to fuel demand. Traders like Algozhoeva believe the notion of gold as the universal currency resonates more strongly than ever.

The heightened demand has triggered a significant logistical shift, with shipments of 400-ounce gold bars from London vaults to Switzerland for conversion into smaller kilo bars. These bars are then flown to the United States by commercial airlines in consignments of up to four tons. This unprecedented level of activity has doubled US gold inventories, adding 600 tons, or more than 20 million ounces, into American vaults since the trend began.

Central banks have also ramped up gold reserves following Russia’s invasion of Ukraine in 2022. According to the World Gold Council, central bank purchases of gold have been increasing at a rate of 1,000 tons per year, doubling the figures seen over the preceding decade. The final quarter of 2024 saw a 54% annual increase in central bank gold holdings, totalling 333 tons. Notably, China’s central bank remains one of the largest buyers, increasing its reserves to hedge against potential geopolitical risks and currency fluctuations.

Global investors have followed suit as exchange-traded funds (ETFs) linked to gold reached their second-highest inflow levels on record in the first quarter of 2025. According to the World Gold Council, $21 billion flowed into these investment vehicles during this period. Retail demand for gold bars and coins increased by 3% last year, with companies like Costco capitalising on the trend. Costco’s gold bars, priced at approximately $2,000 each, reportedly sell out within hours of availability, generating as much as $200 million monthly in revenue.

Billionaire investors like John Paulson expect gold prices to climb further. Citing central bank buying and persisting trade tensions, Paulson predicts that gold could reach $5,000 an ounce by 2028. He highlighted events such as the freezing of Russia’s foreign reserves during its invasion of Ukraine as a wake-up call for other nations, spurring them to increase their gold holdings. Paulson noted that physical gold, unlike other reserves, cannot be confiscated in the event of sanctions or conflict, making it a safe and stable asset over time.

Even as jewellery sales decline, a shift towards gold bars and coins demonstrates growing consumer belief in the metal’s role as a reliable store of value. With widespread economic uncertainty, many see gold as the ultimate safeguard. Konstantin Popolis, a manager at Green Diamond Buyers, summed it up aptly: “It’s the only asset you can truly trust. It proves you have something tangible—it’s not digital, it’s not a bubble, and it can’t be destroyed.”

The rise of gold in the 21st-century market highlights its enduring appeal in times of economic turbulence. As central banks, investors, and individuals embrace gold amidst shifting global dynamics, the metal seems poised to reclaim its place as an indispensable financial asset.