Gold prices have climbed to unprecedented levels in recent weeks as investors rushed into the traditional safe-haven asset amid intensifying global political uncertainty.

The precious metal surged beyond the $5,000 per ounce threshold for the first time on Monday and briefly touched $5,500. Silver and platinum prices also recorded sharp gains during the same period, reports UNB.

However, prices of all three metals later retreated sharply following indications of greater political stability in the United States. Even so, they remain significantly higher than a year ago.

Global trade flows have been disrupted by tariffs imposed by US President Donald Trump on countries he considers unfavorable trading partners. His trade stance has continued to unsettle markets, fueling demand for gold, according to Emma Wall, chief investment strategist at Hargreaves Lansdown.

In January, both gold and silver reached record highs while global stock markets fell, after Trump threatened new tariffs on eight European countries opposed to his proposed takeover of Greenland.

Hamad Hussain, an economist at Capital Economics, said gold’s reputation as a safe asset, compared with risks linked to US foreign and fiscal policies under Trump, has pushed the metal “in the spotlight”.

Ongoing wars in Ukraine and Gaza have added to wider geopolitical anxiety. The US seizure of Venezuelan President Nicolás Maduro also sent gold prices soaring.

Trump’s Greenland threats further strained global politics, weakening confidence in the US dollar and prompting investors to turn to precious metals. The dollar’s sharpest decline during Trump’s presidency followed his so-called “Liberation Day” tariffs announced last spring.

“Gold is doing what it does best when the world feels messy, jumping amid rising trade tensions, geopolitical flare-ups, political uncertainty in the US,” Wall says.

“Fresh friction between the US, Canada and China, unease around Europe and the Middle East, and even shutdown risks in Washington have all added to gold’s appeal.”

Heavy buying by central banks has been another major driver behind rising gold prices.

“Investors and global central banks have... favored gold as their reserve currency of choice, which they believe insulates them from US policy dependence,” Wall says.

“Certain nations will have observed the threat of Russia having its US dollar assets seized by global players supportive of Ukraine, and subsequently considered the metal a more attractive neutral reserve,” she added.

Although central banks are still purchasing more gold than before 2022, Hussain noted that demand appeared to ease somewhat in 2025.

China remains the world’s largest gold buyer, with demand coming from jewellery purchases and investment. Western investors have also poured money into gold-owning and trading firms.

Hussain said new market entrants have also played a role, citing digital currency firm Tether, which has reportedly amassed gold reserves larger than those of some small countries.

Gold prices had surged partly on fears Trump might appoint a Federal Reserve chair willing to cut interest rates aggressively, potentially weakening the dollar and stoking inflation. Gold is often bought as a hedge against such risks.

But prices of gold, silver and platinum dropped after reports suggested Trump would nominate Kevin Warsh, viewed as a more reassuring choice than other contenders, reports BBC.

Despite the pullback, precious metals remain far above last year’s levels due to persistent geopolitical tensions, existing tariffs, fresh tariff threats and ongoing global conflicts, keeping safe-haven demand strong.

One of gold’s enduring attractions is its limited supply.

Nicholas Frappell, global head of institutional markets at ABC Refinery, told the BBC: “When you own gold, it’s not attached to the debt of somebody else like a bond is or an equity where the performance of a company will drive performance.

“It’s a really good diversifier in a very uncertain world.”

Recent volatility, however, underscores that gold prices can fall as quickly as they rise, like other traded commodities.