Gold remains one of the most sought-after assets on the financial markets, particularly in times of economic and geopolitical tension. Faced with global economic upheaval, persistent inflation, and political uncertainty, gold is establishing itself in 2025 as an essential pillar of investment portfolios.
Its role goes beyond that of a simple safe haven: it is becoming an allocation strategy in itself, attracting central banks as well as institutional and private investors.
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A Sharp Rise in Prices, Driven by Central Banks and Global Instability
The price of gold rose to $2,928 per ounce in February 2025, illustrating its growing appeal in the face of global economic risks. This surge in prices cannot be explained solely by increased demand, but also by deeper structural trends, including the diversification of central bank reserves and rising geopolitical tensions. With the intensification of the war in Ukraine, Western sanctions against Russia, and economic rivalry between the United States and China, uncertainty is reaching new heights, reinforcing gold’s status as a hedge against global instability.
Central banks play a key role in this dynamic. In 2023, they acquired a record 1,049 tons of gold, confirming its status as a safe haven in an environment marked by eroding confidence in fiat currencies. According to a study by the University of Basel (2023), these institutions increase their gold reserves by an average of 15% during geopolitical crises, underscoring its strategic importance. This movement reflects a growing desire among countries to ensure their financial autonomy and limit their exposure to currency fluctuations, particularly the US dollar.
At the same time, the global gold market is experiencing major disruption with a shortage of physical metal in London, contrasting with record stocks in New York. This imbalance, amplified by fears of US tariffs on gold and arbitrage opportunities between the spot market and futures contracts, reflects growing tensions between the world’s major financial centers. China, in particular, is pursuing a policy of massive accumulation of gold reserves, well beyond the 1,037 tons officially declared in 2023, in a strategy aimed at reducing its dependence on the dollar and Western-dominated financial infrastructures.
Effective Protection Against Inflation and Low Real Interest Rates
Despite aggressive monetary tightening policies, inflation remains a major concern for advanced economies, hovering between +2% and +4%. This situation increases the appeal of gold, which benefits from a strong negative correlation with real interest rates. A study by MIT (2022) shows that when these rates are below 1%, gold outperforms other asset classes by an average of 5%. This inverse relationship makes it a preferred instrument for investors seeking to protect their capital in times of currency devaluation.
In addition, gold is significantly less volatile than equities in a low interest rate environment, offering a competitive Sharpe ratio. Between 2000 and 2020, it generated an average annual return of 9.6%, outperforming sovereign bonds and showing a low correlation with equities (0.03 over two decades). These characteristics allow investors to effectively integrate it into their portfolios to improve their resilience to financial market fluctuations.
The Rise of Institutional Investments and Technological Applications
Gold no longer appeals only to central banks. Exchange-traded funds (ETFs) specializing in gold saw a 20% increase in assets under management in 2024, evidence of growing appetite among institutional investors. These massive inflows reflect a heightened awareness of the benefits of gold in a context of diversification and risk management linked to stock market volatility.
Beyond its role as a financial asset, gold is also experiencing growing demand in industrial and technological applications. A study by the University of Hong Kong (2024) forecasts a 12% annual increase in gold consumption in these sectors by 2026, as its characteristics meet the needs of semiconductors, batteries, and advanced electronic devices. This trend is driven in particular by the transition to more efficient and eco-friendly technologies, which incorporate more gold components to improve the conductivity and reliability of electronic circuits.
Risks to Watch
Despite a generally favorable environment, certain factors could temper gold’s rise. An unexpected rise in interest rates by central banks, particularly in the United States, could reduce its appeal by increasing its opportunity cost. In addition, an appreciation of the US dollar, which has historically been negatively correlated with gold, could limit its gains, making the precious metal more expensive for international buyers.
Another risk factor is the economic situation in the main gold-consuming countries. China and India, which together account for around 50% of global demand for gold jewelry, could see their consumption affected by an economic slowdown. A decline in demand for gold jewelry in these key markets would have a significant impact on the global market balance.
Conclusion
In a world marked by recurring economic crises, heightened geopolitical tensions, and persistent inflation, gold is more than ever an essential strategic asset. Whether for its function as a store of value, its role in portfolio diversification, or its growing applications in the technology industry, gold remains an effective hedge against financial turmoil.
In 2025, gold could be an essential pillar for investors seeking to secure their assets in an increasingly uncertain environment.
[1] This ratio measures the relative return on a « risky » investment compared to that of an asset considered risk-free.
