Gold Hits Record Highs as Global Chaos Fuels Safe-Haven Surge

KARACHI: Gold has been on a turbulent yet record-breaking ascent over the past six months, propelled by escalating geopolitical tensions and unpredictable market forces.

From international conflict to economic policy shifts, a perfect storm has driven the precious metal to historic highs.

Dramatic Price Movements

Adnan Agar, Director at Interactive Commodities, notes that gold prices opened around $2,750 in November, briefly dipped to $2,500, and then rocketed to a staggering $3,500—a milestone that investors had long anticipated. This rollercoaster movement of nearly $1,000 reflects deep-seated anxiety across global markets.

In Pakistan, gold followed suit, surging from Rs295,000 to Rs350,000 before settling near Rs346,000. As always, the local market mirrored international dynamics.

At the heart of this gold rush is its timeless identity as a safe-haven asset. Widespread instability—from the Russia-Ukraine war to the Israel-Hamas conflict and tensions involving the US and Iran—has pushed risk-averse investors towards gold. Between January and April 2024, the market saw an especially sharp climb of $600–$700, sparked by mounting uncertainty around Donald Trump’s political resurgence and his aggressive trade rhetoric.

However, the momentum began to cool by late April, when gold dipped from a peak of $3,276 to $3,215. Technical corrections played a role, as prices fell below key support levels, while a renewed surge in US equities shifted some investor focus away from gold.

Central Banks Boost Reserves

Beyond investor sentiment, central banks have been quietly fueling the rally. Nations like China, Turkey, and Poland have increased their gold reserves consistently. As reported by the World Gold Council, China added to its stockpile for the 17th consecutive month in April, underscoring gold’s role in global de-dollarisation efforts.

Expectations of US Federal Reserve rate cuts further lifted gold’s appeal by weakening the dollar. Though traders initially bet on multiple cuts in 2024, stronger-than-expected US economic data occasionally dampened enthusiasm, resulting in sporadic pullbacks.

Potential regional conflicts also loom large. Adnan Agar warns that rising India-Pakistan tensions could ignite another sharp rally, possibly adding $100–$150 to the price of gold, once again proving that ‘chaos drove gold to peaks’.

Retail demand tells a mixed story. While Indian buyers are cautious amid elevated prices ahead of the wedding season, Chinese investors continue purchasing gold bars and coins. Meanwhile, the approval of Bitcoin spot ETFs in early 2024 has drawn some speculative interest away from gold, but its foundational appeal remains intact.

On the supply side, the mining industry is grappling with rising costs and operational hurdles, which could restrict output and add pressure to prices if demand holds steady.