Global economic uncertainty feeds the demand for safe haven
The global economy navigates in a turbulent phase characterized by delaying growth, persistent inflation and fleeting trade policy. The US economy shows signs of tension, with revised task data that reveals nearly a million fewer jobs than previously reported. This has caused the fear of a recession, causing investors to seek refuge in gold. The uncertainty surrounding tax and monetary policy, especially under the government of President Trump, has further intensified the market anxiety.
Trump’s ceases -furen -Initiative staggered in Ukraine
President Donald Trump’s much published promise to end the war in Russia-Ukraine has not been extradited. Despite several rounds of negotiations and a short, partial cessation -the fires, its hostilities resume, resulting in devastating consequences. The lack of progress and observed diplomatic incompetence has undermined confidence in American leadership, which contributes to geopolitical instability and strengthening the attraction of Gold as a hedge against conflicts.
Tensions in the middle east escalate after the Israeli strike in Qatar
In a dramatic escalation, Israel launched air strikes on Senior Hamas leaders in Doha, Qatar -a country that has long served as a mediator in the Gaza conflict. The attack killed several individuals and pulled sharp conviction of Qatar and other Arab countries. The strike took place during a meeting to discuss a proposal supported by the US proposal, which further complicates diplomatic efforts and the fear of a broader regional conflicts was increased. This geopolitical flash point has further fed the Gold meeting, while investors are bracing for possible fallout.
Rise of a new summit after the SCO for economic power block
The recent Shanghai Cooperation Organization (SCO) TOP in Tianjin, China, meant a possible shift in global economic power dynamics. Leaders from China, Russia, India and other Member States promised to build a new multilateral framework that challenges the US -led institutions. President Xi Jinping’s proposal for a new development bench and financial incentives for SCO members underline Beijing’s ambition to reform the global administration. This step in the direction of a multipolar world order has increased the uncertainty about the dominance of the dollar, as a result of which central banks and investors increase the golden property as a strategic hedge.
American recession fears and tariff -controlled inflation
The aggressive tariff policy of the Trump administration has increased the average effective rate percentage in the US since 1935 to the highest. These rates have led to higher consumer prices, reduced family income and increased unemployment. The economic impact of protectionist measures has strengthened the fear of recession, which stimulates the demand for gold. As inflation remains increased and growing growth, gold offers a reliable storage of value in the midst of deteriorating economic conditions.
Expectations of American interest rates
In the midst of weakening of the labor market data and persistent inflation, the Federal Reserve is generally expected to leave the interest rates during the upcoming meeting on 17 September. Although a point of 25 basis is almost certain, some analysts bet on a more aggressive step of 50 basic points. Lower interest rates reduce the alternative costs of keeping non-yield assets such as gold, making it more attractive to investors. The expectation of monetary relaxation has been an important engine of the recent increase in Gold.
Resilient investor and ask for central bank
Investors appetite for gold remains robust, with record intake in ETFs supported with gold. Central banks, especially in emerging markets, have staged gold purchases to limit the US dollar and geopolitical risks. In India and China, consumer demand is also increasing, supported by favorable changes in regulations and cultural affinity for gold. This broad demand underlines the lasting attraction of Gold in various market cycles and regions.
The meteoric rise in Gold in 2025 is not only a reaction to economic data or interest rate capacity – it reflects a deeper crisis in global institutions, Fiat -Malutas and geopolitical stability. While the world confronts a complex web of challenges – from failed peace initiatives and regional conflicts to the shifting of power blocks and economic headwind – Lold stands out as a beacon of safety and resilience. Unless these uncertainties illuminate it, the rally can still have room to run.
(The author Hareesh V is head of Commodity Research, Geojit Investments Limited. Views are own)
((Indemnification: Recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)
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