The price of gold has been rising on global markets to near record highs.
This time last year, gold prices on international markets were trading at below $2,000 (€1,848) per troy ounce. Now they are above $3,000 and predicted to rise further.
Gold is often seen as a safer investment when there are political and economic uncertainties in the market.
“There is a lot of uncertainty coming out of the US, particularly around tariffs,” said Dr Fergal O’Connor, senior lecturer in financial economics in University College Cork.
Dr O’Connor said that he has seen gold prices spike since before Christmas, as forecasts of an impending trade war and tariffs coming from the United States gained more prominence.
“One of the things we are pretty sure will happen when Trump’s tariffs come in is the prices will rise everywhere,” Dr O’Connor said.
“Higher inflation is probably going to be matched with lower growth. That is really good for gold prices,” he added.
So far for the first quarter of this year, gold prices have risen between 17-18%.
“It is over €2,800 an ounce [of gold],” Dr O’Connor said.
As well as the threat of tariffs, a rise in gold prices could also be reflecting the higher geopolitical uncertainty right now.
Gold prices spiked when Russia invaded Ukraine in 2022 and October 2023 after Hamas gunmen launched an attack in southern Israel and the Israeli prime minister declared that Israel was at war with Gaza.
“Now, we are seeing an increase of tensions as well for Iran and Russia.
“On top of that, we have worries in the US of a recession and going with that higher borrowing costs and all of that is just encouraging people to move their money into gold and out of areas like equities, where markets have been falling now all year,” Dr O’Connor explained.
Because gold is not as reliant on growth as other commodities on the stock market, it has historically been seen as one of the safest areas to put money.
“We can look at [gold] as a good indicator of the current level of fear,” Dr O’Connor said, “but that does not mean that people or markets are correct. They can not predict the future.
“Nobody was predicting gold prices would be over $3,000 an ounce last year and now we have big investment banks predicting prices getting over $4,500,” he added.
Article Source – Price of gold rises to near record high as US tariffs loom – RTE
