The golden ticket? Why betting on gold is looking more solid

If you are as terminally in the YouTube/Podcast sphere as I am, you have probably seen some of your favourite content creators recently peddling sponsorships related to gold. It is puzzling: at a time when so much money is being thrown at the latest AI models to the point that we may be heading towards a bubble, humanity’s oldest currency is also seeing its stock rise to up to $5000 an ounce, even expected to rise to $6000/oz by the end of the year. What is behind this 21st-century gold rush that has gripped talking heads and investors alike? 

Gold is a key flight-to-safety during times of economic and political turmoil for various reasons. Its long-standing historical value shields it from the volatility of free-floating national currencies and stock markets, while its stable purchasing power shields its owners from inflationary shocks. Furthermore, its intrinsic usefulness across many industries generates a stable source of demand and, hence, value. Gold is scarce, tangible, and historically valuable worldwide. With the new Trump administration rounding out its first year of contradictory, chaotic policies, economic stability is little more than a distant memory, and gold has benefited. 

Just days into the year, gold soared following the American abduction of the Venezuelan president

Firstly, the Trump administration has been waging a full-throated crusade against Fed chair Jerome Powell’s cautious monetary policy. The president has time and time again ranted against Powell’s holding interest rates steady at 4.5% through most of 2025. Trump has blasted him as “always TOO LATE and WRONG”, and demanding far more sweeping cuts, even reportedly saying last December that rates should be below 1%. With this downward pressure on the Fed’s interest rate, investors protect their purchasing power by moving away from interest-accruing investments like government bonds, into non-interest-yielding assets like gold as the former’s value declines with each cut. Whilst Powell has reduced interest rates to 3.50-3.75% by the end of 2025 (through a 25 basis points decrease every month from October), this was not enough to avert the President’s ire, with a conveniently-launched DOJ investigation into Powell’s allegedly misleading testimony about the costs of the Fed’s headquarters’ renovations. Rates have held steady since, even as two Trump-appointed governors dissented in favour of further cuts, along with fellow Trump-aligned governor Stephen Miran. 

Falling US interest rates not only make interest-accruing investments less attractive, but also weaken the dollar, as dollar-denominated assets become less valuable and demand for them falls in favour of other currencies. Additionally, gold becomes more attractive. Even as gold’s nominal dollar price rises, a weaker dollar reduces its real cost for foreign buyers, making it cheaper for other currency holders to buy, thereby increasing demand and its price. Indeed, as gold went bullish across 2025, the dollar’s value slumped by over 9%. 

But it isn’t just domestic disputes causing the greenback to tremble before the karat. 2025 was rocked by dramatic tariff announcements like the Liberation Day tariffs, along with equally drastic reversals from Washington, and major escalations in conflicts around the world; 2026 is shaping up to be no quieter. Just days into the year, gold soared following the American abduction of the Venezuelan president, Nicolas Maduro, and Trump’s assertion that Washington was now “in charge” of Caracas. Across the Atlantic, tensions over Greenland between the European Union and the US have flared up again as Trump set his sights on America acquiring the Danish-ruled island. The White House rattled its reliable sabre of tariffs, threatening eight European nations including the non-EU UK, with 10% tariffs if they do not concede, with an added threat of a 25% hike in June if the Europeans remained firm. Trump TACO’d (Trump Always Chickens Out) again after European leaders like Macron floated using the EU’s “trade bazooka” – its anti-coercion instrument allowing it to force controls or even shut out €93bn of American exports into the EU – along with severe market backlash as the S&P 500 crashed by over 200 points until Trump backed down on January 21st. Crucially, gold piled high while stocks were being slashed, rising by around $200/oz during the Greenland debacle. 

2025 has been a gold-loving year spearheaded by a gold-loving president 

Does all this demand for gold mean that we are in a recession? Not really. Job markets have sharply cooled down throughout 2025 compared to the previous year, only adding about 49,000 jobs a month compared to 2024’s 168,000 monthly average jobs. However, GDP grew by 4.3% in Q3 of 2025 – higher than Q2’s 3.8% – primarily due to strong consumer spending, despite declining confidence, along with investment in artificial intelligence. Powell also credited his January decision to halt cutting rates to strong economic growth and stabilisation in hiring trends and the unemployment rate, even as inflation remained “elevated” at around 2.7% (though the figure is distorted by interruptions in data collection during last autumn’s US government shutdown). Trump’s new pick for Powell’s successor as Fed Chair, Kevin Warsh, has been historically hawkish in favour of higher interest rates despite his recent statements to the contrary, criticising the Fed’s tight policies, and so he is viewed as a safe pair of hands across Wall Street in remaining operationally independent despite Trump’s aggressive anti-interest campaign. Despite all the volatility, rising gold portfolios alone do not make a recession. 

All in all, 2025 has been a gold-loving year spearheaded by a gold-loving president. Thus, the age-old currency stands tall a while longer.