A significant surge in the prices of gold and silver is prompting analysts to examine the underlying causes of this trend, which they interpret as a fundamental shift in investor trust. With geopolitical tensions and economic volatility on the rise, many are flocking to these traditional safe havens as a hedge against potential instability.
Investor Behaviour Driven by Economic Policies
The unprecedented increase in gold and silver investment has gained momentum in 2026, largely attributed to the aggressive economic policies pursued by former President Donald Trump. Gold prices have soared, reaching a peak of nearly $5,595 (£4,060) per ounce in January, before settling at about $5,250 (£3,810) following speculation regarding US military actions in Iran. This marks a striking increase from the price at the start of Trump’s second term last year.
Silver has mirrored this trend, climbing from under $30 (£22) an ounce last April to over $118 (£86) in recent weeks, showcasing a remarkable nearly fourfold increase. Giuseppe Sersale, a strategist at Anthilia in Italy, noted that the market shows signs of a “mania”, with price movements resembling a “parabolic” trajectory.
The Safe Haven Appeal of Precious Metals
Historically, gold has been viewed as the ultimate safe haven asset, providing a reliable store of value amid inflation and geopolitical uncertainty. The current landscape, marked by Trump’s controversial policies—including aggressive tariffs and threats of military action—has significantly heightened economic uncertainty. These factors have led investors to seek refuge in gold and silver, which are perceived as more stable alternatives to volatile currencies.
Danielle Hathorn, a senior market analyst at Capital.com, succinctly articulated the sentiment driving this shift: “Gold and silver are reflecting more than short-term market stress; they are signalling a re-pricing of trust.” This sentiment suggests that as confidence in traditional currencies and institutions wanes, investors are increasingly looking to precious metals to preserve their wealth.
Central Banks and Retail Investments Fuel Demand
The World Gold Council (WGC) recently highlighted a notable trend among central banks, which are increasingly diversifying their reserves away from traditional assets like US treasuries. While central bank purchases remain significant, they actually dropped by 21% in 2025 compared to the previous year, indicating a shift in strategy rather than a complete abandonment of US bonds.
Retail investors have also played a crucial role in the recent demand surge, with many individuals seeking to capitalise on the rising prices. Louise Street, a senior market analyst at the WGC, remarked that both consumers and investors are turning to gold as a response to the “new normal” of economic and geopolitical risks. In the UK, the Royal Mint is actively encouraging retail consumers to invest, promoting the allure of gold as a means of securing their financial futures.
The Dollar’s Decline Amidst Market Volatility
The fluctuating confidence in US economic policy is further reflected in the recent decline of the dollar. As geopolitical risks and trade tensions rise, the dollar has faced renewed depreciation pressure, with the euro surpassing $1.20 (£0.90) and the pound reaching $1.38 (£0.73). This depreciation has raised questions about the stability of US monetary policy, especially as Trump’s administration grapples with its conflicting desires for both a strong and weak dollar.
Despite these challenges, US stock markets have remained robust, buoyed by significant performance from leading technology companies. The S&P 500 index experienced a 17.9% increase in 2025, highlighting a disconnect between stock market performance and the underlying economic uncertainties.
Why it Matters
The dramatic rise in gold and silver prices illustrates a critical moment in the global economic landscape. As investors reassess their trust in traditional currencies and institutions, the growing preference for precious metals signals deeper concerns about geopolitical stability and economic policy. This shift not only highlights the vulnerabilities inherent in the current financial system but also underscores the need for strategic diversification in investment portfolios in an increasingly unpredictable world.
