Gold is soaring, posting record highs in almost daily trading sessions. In 2023 and 2024, gold prices continued to rise, with double-digit gains in both years – 13% in 2023 and 27% in 2024. So far in 2025 too, gold continues to shine, with a year-to-date return of nearly 10%.
So, what’s behind this gold rush? You see, the price of Gold typically rises during high inflation, geopolitical uncertainty, or sometimes even an equity market downturn, as observed in the past. Historically, gold has donned the hat as the best hedge against such risks.
Source: Macrotrends ( As of February, 10,2025)
But wait! Gold’s role as an inflation hedge has recently been called into question. Here’s why. Inflation in the United States peaked at 9.1% in June 2022, and when inflation started to fall, gold prices started rising.
Source: Tradingeconomics
US inflation surged post-Covid, but by calling it ‘transitory’, the US Fed delayed rate hikes until March 2022. The Fed initiated a rate-hike spree after realizing the inflationary pressure and continued to raise rates until July 2023. The rates remained constant until September 2024.
Source: Macrotrends ( February 2025)
But markets knew inflation was trending lower and rate cuts are in the offing. As a result, gold prices began to surge earlier in February 2024.
Back in May 2022, we did a story on why gold is not a preferred asset class in a rising interest rate scenario. Then, we said:
“What is keeping the gold price in check is the interest rate scenario. In the US, the interest rates have started to move up and the Fed is expected to announce a series of rate hikes after the May 2022 hike of 0.5 per cent. In a rising interest rate scenario, gold is not a preferred investment.”
So, it seems geopolitics played a significant role in the gold price, particularly after 2020. In addition to rate cuts, gold prices have surged due to geo-political tensions arising from the Russia-Ukraine war, the Israel-Hamas conflict and the increasing tensions between China and Taiwan
On top of it, the global uncertainty worsened as Donald Trump returned to the White House. Today, Trump’s tariff policies are poised to trigger trade wars,
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