Can’t bet on gold to continue to rise at the same pace

While the theory of gold delivering good and steady returns would still hold over the longer term, the annual increases could be muted

- MADAN SABNAVIS

Global uncertainty caused by either war or any extreme policy, which can surround crude oil prices or tariffs, generally causes excess volatility in all markets.

With a plethora of developments taking place in the current context, it is hard to conjecture whether currencies will decline or get stronger. The bond markets remain in flux as central banks evaluate the situation before taking a call on interest rates. The same holds with stocks, which get more volatile and can change direction daily depending on the sentiment. It has been observed that in the last two years or so, one asset which moves in a single direction and tends to thrive in such chaos is gold. This has actually been the story ever since Covid, as it has gained in strength for a variety of reasons.

From an average of $1462/ounce in 2019-20, the price has gone up to $2585/ounce in 2024-25. This is an increase of around 76% over 5 years. However, in 2025, due to the tariff issue, there has been a substantial rise from $2709/ounce in January to $3532/ounce in the first week of September, which is an increase of 30%. This comes at a time when stocks have been volatile, bond yields rising, and currencies moving in no particular direction. How can this be explained? And more importantly, can this be expected to continue?