Gold surged to $2,921 per ounce in February 2025, up 45% year-on-year, driven by geopolitical tensions, economic uncertainty, and rising central bank demand. As investors seek stability, will gold’s ascent continue? Explore the key forces behind this new gold rush.
- Gold closed at a record high of 2,921 USD/oz1 February 15th, 2025, marking a +45% year-on-year
- Gold continues to be a key safe-haven asset resulting in sustained upward pressure on prices
- The ongoing trend of reserve diversification should support high prices in the medium term
The price of gold reaches historic levels, driven by geopolitical fragmentation, uncertainty surrounding the second term of D. Trump, and central banks' increasing demand for this metal.
Simon Lacoume, sector analyst at Coface.
Central banks increase their reserves
The multiplication of global shocks (health crises, geopolitical tensions…) have led both governments and private investors to increase their gold holdings since 2019 (Figure 1)out of concern for financial security. In 2024, central banks accounted for 21% of total gold demand, a 10 points increase from 2019. Persistent geo-economic uncertainty, is likely to further strengthen gold's position as a safe-haven asset.
Data for the graph in .xls file
A growing appetite from emerging economies
Some of the world's largest economies, such as China, still only hold a relatively small proportion of gold in their reserves. In 2024, It represented only 6% of the country’s total reserves but demand from the People’s Bank of China has surged in recent years. As a result, gold price movements have shown a strong correlation (above 0.77) with China’s reserve accumulation (Figure 2). Beyond China, several emerging economies - given the current volatile geopolitical environment - may also seek to reduce their dependence on the U.S. economy by increasing their gold reserves. This trend suggests continued upward pressure on this precious metal prices, at least through the first half of 2025.
Data for the graph in .xls file
An attractive investment
The decline in investor confidence in the face of economic uncertainty, high gold valuations (figure 3), and anticipated interest rate cuts reinforce the shift toward portfolio diversification in favor of gold. It has outperformed major stock indices in terms of price returns, highlighting its appeal during times of economic uncertainty. In 2024, private investment in gold accounted for 25% of global demand.
Data for the graph in .xls file
Jewellery at half-mast
Meanwhile, gold demand for jewelry has declined slightly compared to pre-COVID levels, falling 7% between 2019 and 2024 (Figure 1). In 2024, jewelry demand accounted for 40% of total gold demand, a 4 percentage point decrease from 2019. This drop has been especially sharp in major markets such as India, Pakistan, and China, where high gold prices and slowing economic growth have dampened consumer demand.
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Data for the graph in .xls file
1 Intraday quotes reached 2 947 USD/oz
2 Source: Coface Flash Commodities Data
