“In a backdrop of geopolitical uncertainty and ongoing tariff changes, appetite for gold remains strong,” said Suki Cooper, a precious metals analyst at Standard Chartered.
Victoria Hasler, head of fund research at Hargreaves Lansdown, suggested there were two main drivers behind the gold price at present.
“Between Trump’s tariffs and social media comments and the ongoing tensions in both the Middle East and Russia/Ukraine, uncertainty is high and seems to be rising,” she said.
“Markets hate uncertainty. This dynamic has helped to drive the gold price to new highs.”
The second big driver was central banks buying up gold, Ms Hasler said, but the exact reasons for this were difficult to determine. “It’s probably safe to assume that at least part of the reason is a desire to diversify reserves away from US dollars.
“Both of the above drivers remain intact and I can’t see them diminishing in the near future.”
Peaks and troughs of the gold price have occurred at some of the key moments in economic history. At the outbreak of the global financial crisis in 2007, investors bought gold as a haven asset, which led to a rise in its price.
Russ Mould, investment director at AJ Bell, cited World Gold Council figures, which showed central banks had added some 1,045 tonnes of gold to their reserves last year – the third year in a row more than 1,000 tonnes had been bought.
He said we were in an “era in which gold is really starting to shine”.
Since the metal dipped below $1,200 an ounce in late 2018, Mr Mould said prices had “marched inexorably higher”, driven by several factors including the Covid pandemic and higher government deficits pushing investors to “warm to gold once more”.
“Quite which of these issues is now the main driver of gold’s renaissance is hard to divine, especially as Donald Trump’s tariffs are prompting a debate about how inflationary (or stagflationary) they may prove to be, and how effective they may be at funding the new US President’s hoped-for tax cuts,” he said.