Gold hits all-time high, with global tensions set to push price further north

A confluence of global economic ructions, including an emerging tariff war, have pushed gold prices to an all-time-high record, new figures from the World Gold Council (WGC) reveal.

Gold hit US$2,812/oz (AU$4,485/oz) at the end of January 2025, up eight per cent on the previous month, driven by a confluence of factors that have encouraged the uptake of ‘safe haven’ assets, including growing geopolitical risk, a weaker US dollar, falling bond yields, and concerns over rising protectionist economic policy worldwide, driven by the Trump administration’s ongoing tariff threats.

All-time-high prices were logged in all major trading currencies, including an 8.9% jump in British Pound and Canadian Dollar, and a 7.8% and 7.6% increase in USD and Euro prices, respectively.

Gold trading volumes averaged US$264 billion per day across global markets in January, 20% higher than the previous month.

Global gold ETFs saw a US$2.6 billion (30 tonnes) gain in assets under management (AUM), propelled by a surge in inflows to European gold funds (up by US$3.4 billion, or 39 tonnes) – a significant turnaround from 2024, where the region led global outflows.

Within Europe, the UK and Germany dominated inflows. In the UK’s case, a fall in bond yields in the second half of 2024, in anticipation of an upcoming rate cut from the BoE this year, drove gold ETFs higher. In Germany, and similarly in France, political uncertainty, weakening growth prospects, and bellicose US trade policies have encouraged investors’ uptake of gold stocks.

More modest gains were recorded for Asian funds (up US$320 million, or four tonnes), driven by interest from India rather than China, and other global funds.

These gains were partially offset by a US$500 million (six tonne) loss for US funds, which is currently grappling with the uncertainty of a Trump administration. Indeed, in the first week following his inauguration on 20 January, as the WGC notes, investors moved to capture profits from a surging gold price, initiating an early sell-off.

As well, while a weaker US dollar is not a consensus view, increased downward pressure on the currency could drive further support for gold.

A “rattled equity market”, however – noting the recent tech stock selloff triggered by the entrance of a Chinese-developed AI model into what has been an American-dominated AI market – could lure investors back to safe haven gold holdings.

By the end of January, the global AUM reached US$294 billion, another month-end record, and collective holdings continued to rebound (up 34 tonnes to a total of 3,523 tonnes).

Looking ahead, a weakening US dollar may prove a further boon for gold asset holders, considering their inverse relationship. With elections in Germany triggering a sustained strengthening of Euro versus USD, and the continuing strengthening of the Japanese Yen, the WGC suggests increased support for gold’s incumbent strength.