The price of gold has surpassed $5,000 (£3,659) an ounce for the first time, marking a significant milestone in its historic price rally. This surge comes amidst escalating tensions between the United States and NATO regarding Greenland, compounding worries about financial and geopolitical stability.
President Donald Trump’s trade policies have further unsettled markets. Recently, he threatened to impose a 100% tariff on Canada if it finalises a trade agreement with China. In uncertain times, investors often flock to gold and other precious metals, seen as safe-haven assets. Notably, silver also reached $100 an ounce for the first time, reflecting a near 150% increase over the past year.
Several factors are fuelling the demand for gold. In addition to persistent inflation and a weak US dollar, central banks worldwide have increased their gold purchases. The expectation of further interest rate cuts by the US Federal Reserve has added momentum to gold’s appeal. Global conflicts in Ukraine and Gaza, along with US interventions in Venezuela, have also driven prices higher.
The rarity of gold adds to its attractiveness; the World Gold Council estimates that approximately 216,265 tonnes have been mined throughout history. Much of this output has occurred since 1950, enabled by advances in mining technology. Current estimates suggest an additional 64,000 tonnes could still be extracted, although supply is projected to plateau soon.
Last year, gold achieved its most substantial annual gain since 1979. Amidst widespread concerns about Trump’s tariffs and possible overvaluation of technology stocks, gold consistently established new record highs. Analysts anticipate the Federal Reserve may cut interest rates twice this year, reinforcing gold’s allure as an investment.
While demand from investors has soared, central banks have also significantly increased their gold reserves, indicating a shift away from reliance on the US dollar. Despite this growth, experts caution that unexpected positive news could lead to price declines. In various cultures, gold serves purposes beyond investment; it is often purchased during festivals or gifted during celebrations.
Vocabulary List:
- Surpassed /sərˈpæsʌd/ (verb): To exceed or go beyond a certain limit or level.
- Escalating /ˈɛskəleɪtɪŋ/ (verb): Increasing in intensity or magnitude.
- Persistent /pərˈsɪstənt/ (adjective): Continuing firmly or obstinately in a course of action despite difficulty.
- Allure /əˈlʊr/ (noun): The quality of being powerfully and mysteriously attractive or fascinating.
- Interventions /ˌɪntərˈvɛnʃənz/ (noun): The act of intervening especially in a situation to prevent or alter a result.
- Caution /ˈkɔːʃən/ (noun): Care taken to avoid danger or mistakes.
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