In 2025, gold experienced a historic bull market, with the international gold price rising by more than about 70% at one point during the year. This surge is not only the release of the upward momentum accumulated in the price over the previous few years, but also catalyzed by the multiple predicaments of the current world economy. Against the background of in-depth restructuring of the international order, the significant changes in global development confidence, the potential risks in the world economic prospects, and the subtle reflections of historical cycles are all mirrored in the "rally" of gold.
International gold prices usher in a historic bull market
In 2025, the price of gold soared, recording the largest increase since the 1979 oil crisis. Both futures gold and spot gold approached $4,600 per ounce at the end of the year, ushering in the biggest bull market in decades.
Through data analysis, the current round of gold prices gradually entered an upward trajectory in the second half of 2019, with an annual increase of approximately 18%. From 2020 to 2023, international gold prices surpassed $2,000 on multiple occasions, a period marked by the global spread of the COVID-19 pandemic, shocks to the world economy, tense geopolitical situations, and the Federal Reserve's implementation of quantitative easing. In terms of annual growth rates, international gold prices rose by more than 25% both in 2020 and 2024. Entering 2025, gold prices soared, breaking through $3,000 in March, $4,000 in October, and hitting a new record by the end of the year, approaching $4,600.
Driven by the gold market, the prices of other precious metals have also risen. The international silver futures price once exceeded $80 per ounce, up about 150% this year. The price of platinum futures soared to a record high, breaking through the $2,300 per ounce mark for the first time. In addition, copper prices have continued to rise this year, with a cumulative increase of nearly 40%, standing firm at a historical high.
Looking at historical trends, the sharp rise in gold prices in 2025 indicates strong global risk aversion and insufficient economic confidence. However, according to forecasts from multiple international institutions, the global economic growth rate will not slow down significantly in 2025 and 2026. Analyses suggest that the major risks to the current world economy mainly stem from factors such as the tense global trade situation caused by the tariff wars initiated by the United States and geopolitical conflicts.
Multiple factors boost the rise in gold prices
Gold has become an outstanding investment category in recent years, which not only reflects the rise in global risk aversion demand but also indicates the declining trend of the US dollar's credit. Both official and private investors around the world regard gold as an important choice for hedging risks.
The hedging function is an important value of gold, and risk has always been the "key word" driving up gold prices. This round of gold bull market emerged from 2019 to 2020, mainly due to the outbreak of the epidemic and the risk of recession faced by the world economy. In 2022, the Russia-Ukraine conflict intensified geopolitical risks, and the freezing of Russian foreign exchange reserves by the United States and Western countries triggered U.S. credit risks. In 2025, the United States launched a large-scale tariff war, which exacerbated global trade and supply chain risks. The combination of factors such as the U.S. government "shutdown", the sluggish European economy, Japan's economic policy dilemma, and ongoing geopolitical conflicts has jointly boosted the market's demand for gold as a safe haven.
Among a series of risks, the credit risk of the US dollar is an important driver for the upward movement of gold prices. Whether it is the United States taking the lead in freezing the overseas assets of Russia and other countries, or using the international status of the US dollar to transfer domestic economic problems to the world through monetary policies of "releasing liquidity" and "withdrawing liquidity", the credit risk of the US dollar has been fully exposed. In addition, the US government is addicted to borrowing, and the unsustainability of US debt has greatly damaged the credit of the US dollar. A report from the Bank for International Settlements shows that the proportion of the US dollar in global central banks' foreign exchange reserves has dropped from more than 70% at the beginning of this century to about 58% in recent years.
To hedge against the credit risk of the US dollar, governments and major central banks worldwide have accelerated the promotion of reserve diversification in recent years, with large-scale increases in gold holdings, which has become an important force driving up gold prices. According to a report released by the European Central Bank in June 2025, in 2024, calculated at market prices, the share of gold in global central bank reserves rose to 20%, surpassing the euro's 16%, making it the world's second-largest reserve asset after the US dollar; the net gold purchases by central banks around the world also exceeded 1,000 tons for the third consecutive year, setting a historical record.
The function of investment preservation has contributed to the rise in gold prices. The Federal Reserve started its current interest rate cut cycle in September 2024 and has cut rates six times so far, which has reduced the attractiveness of dollar assets and also driven up the price of gold denominated in U.S. dollars. Since 2025, the U.S. dollar has been weak, with the dollar index falling by nearly 10% cumulatively during the year. Along with the strength of gold prices, the scale of global gold exchange-traded funds (ETFs) has expanded significantly. All these have supported gold prices and prompted more investors to turn to gold.
The Economic "Cyclical Law" of Soaring Gold Prices
In troubled times, gold; in prosperous times, collectibles." This investment adage implies a connection between gold and the current situation. As a traditional safe-haven asset in human history, gold is often more favored by investors in times of intertwined changes and chaos. Sorting out the important nodes and inducing factors of the skyrocketing gold price can, to a certain extent, provide insight into the trends of the world economy.
Due to its natural endowments and scarcity, gold has functioned as a currency for a long period in human society, serving as a means of storing social wealth, a measure of value, and a medium of circulation. With the development of the economy and society, although gold no longer directly acts as a currency, the gold standard made it play a "ballast stone" role in the monetary system until 1971, when the United States announced the decoupling of the US dollar from gold. The monetary function of gold has faded, but its functions of hedging risks and preserving value in investments have been strengthened in various crises.
Overall, during periods of economic growth, market preference for risky assets increases, with more funds flowing into investment areas such as the stock market. The safe-haven demand for gold relatively decreases, and gold prices mostly remain relatively stable or in a downward phase. When the economy faces a crisis or major challenges, investors turn more to gold for preservation and hedging, driving up gold prices.
In the 1970s and 1980s, due to geopolitical conflicts and local wars, the world experienced multiple oil crises, and the global economy even fell into recession, with the price of gold surging several times. During the second oil crisis around 1980, the price of gold rose to a historic high of $850 per ounce, and the price of silver rose to nearly $50 per ounce. After the end of the Cold War, global economic exchanges gradually became active, and the world economy gradually entered an upward cycle. In 1999, the international gold price fell to about $250 per ounce. At that time, in an era dominated by accelerating economic globalization and technological development, investors' enthusiasm for gold, an investment "lacking potential", obviously cooled down.
The global economy experienced over a decade of rapid development. By 2007, the spread of the U.S. subprime mortgage crisis triggered a global financial crisis, pushing the world economy into a recession. Gold prices rose all the way, reaching a historic high of $1,900 per ounce in 2011. As the world economy recovered, gold prices gradually fell back, standing at the level of $1,000 per ounce by 2015.
The current surge in gold prices has complex causes, including economic difficulties, geopolitical conflicts, trade risks, and the loss of U.S. dollar credit. Behind it lies the underlying logic of the accelerated evolution of the century-old changes and the world entering a new period of turbulence and transformation. The world economy may not enter a downward cycle in the short term, but its development process will involve very complex multiple games. As an article on the European website *Modern Diplomacy* puts it, gold will evolve into an important long-term asset, rather than just a cyclical hedging tool.
