As gold prices shatter records and global central banks quietly shift their reserves, investors are seeing more than just a rally in precious metals—they’re witnessing a growing global scepticism about the future of the US dollar. With demand surging and central banks hedging against instability, gold’s meteoric rise is painting a clear picture of deepening cracks in the global financial order.
Gold has now surpassed $3,050 per ounce on the London spot market, propelled by more than just inflation fears or safe haven flows. The traditional framework for understanding gold’s performance—its inverse relationship with the US dollar and bond yields—has been reshaped by deeper concerns. Gold is simultaneously acting as currency, commodity and financial asset, making it uniquely positioned to respond to mounting uncertainty in the US fiscal and monetary landscape.
The US Federal Reserve’s recent decision to hold interest rates steady, while signalling a softening stance moving into April, has only reinforced expectations of rate cuts throughout the year. This has weakened the dollar, boosted gold prices and underscored the asset’s resilience in turbulent conditions. But this is more than a reaction to monetary policy; it’s a response to waning global confidence in the US financial system.
The tariff-heavy legacy of Donald Trump’s administration has cast a long shadow over American economic credibility. These protectionist measures have stirred fears of a broader slowdown in US growth, undermining both the value of the dollar and the perceived reliability of US-held reserves. As a result, countries around the world are rebalancing their reserves—shifting away from US dollars and towards gold.
In January alone, central banks acquired 18 tonnes of gold, with emerging economies leading the way. This marks a continuation of a powerful trend, as nations like China, India and others move to insulate their reserves from geopolitical and financial risk. Long-standing holders such as the US and Europe continue to maintain sizeable gold reserves, but it is the rapid accumulation by emerging markets that is reshaping the demand landscape.
With total gold demand reaching nearly 5,000 tonnes in 2024, the market is being driven not only by central bank activity but by strong retail interest in jewellery and bullion. Gold’s role as a hedge against instability has rarely been more pronounced. As geopolitical tensions rise and America’s fiscal strategy grows increasingly insular, gold is regaining its status as the ultimate store of value.
London-listed company KEFI Gold and Copper plc (LON:KEFI) is an exploration and development company focused on gold and copper deposits in the highly prospective Arabian-Nubian Shield. The Company operates in Ethiopia and Saudi Arabia with projects including Tulu Kapi project, Jibal Qutman EL and Hawiah.
