Safe-haven gold has gone above $4,000 per ounce globally—but it needn’t stay there
Gold’s record high reflects an investor flight to safety in response to uncertainty over the world order in general and other global assets like US Treasury bonds in particular. But what happens if and when anxiety begins to ease?
Gold seems to be on an unstoppable uprun. The yellow metal is crossing one milestone after another. It smashed past the $4,000 per ounce level globally and touched ₹1,22,000 per 10gm in India on Wednesday.
Since Donald Trump entered the White House for the second time, its price has risen by 50%. This is no coincidence. Trump’s policies have created sufficient geopolitical and economic uncertainty around the world to send investors into the safety promise of gold. Even central banks seem to be using it to hedge some of their exposure to US Treasury bonds.
Given the tendency shown by the US to weaponize its dominance of global finance, it’s no surprise that countries are looking to ease their dependence on the dollar as well as assets denominated in it.
Some observers expect today’s global dynamics to sustain demand for gold, but there’s no saying if investors will give up some of their anxiety and shift their money back into assets that actually yield an interest payback or dividend.
While gold is a store of value, and has outperformed spectacularly in that role, it does almost nothing for economic progress. Its appeal as a non-crisis-time investment remains weak.
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