By Dr. Adam Trexler, President and Founder, Valaurum®

For many investors, the price of gold can be a bellwether for broader economic conditions. However, gold is a unique commodity insofar as investors tend to purchase it as a hedge against looming economic downturns, and during times of prosperity. No other commodity follows this paradox.

In addition to the price of gold reaching unprecedented highs recently, it has achieved multiple record highs since the beginning of 2025. For a few quick examples, gold was trading at $2,970 on February 5, 2025 (a record high), then jumped above $3,000 for the first time in history on March 14, 2025. A few weeks later, on April 21, the price of gold topped $3,400 – yet another record. At the time of this writing, gold is trading at nearly $3,300 per Troy ounce as investors respond to international news reports and shaky economic conditions. In the past 18 months, gold prices per Troy oz. have stayed above $2,000. According to a Reuters article published in April, “Spot gold has hit 28 record highs so far in 2025, of which 16 are above the $3,000/oz milestone. Prices are up 31% so far this year, after ending 2024 with a 27% annual rise.”

As Gold Prices Rise, What Has the Market Response Been?

Based on these rising prices, there has been an extreme push-pull conflict between groups that are interested in holding gold and aren’t concerned about the price, and those who wish to purchase gold to make physical products. The first group comprises entities such as central banks and the investor market, while the second is primarily made up of jewelers and coin or bar dealers. Investors in the first group aren’t interested in the physical gold itself and primarily care about the price. They keep their gold in ETFs, central banks, and physical vaults. Circulators, on the other hand, are only interested in the physical gold as they use it to sell and distribute it as coins, bars, and jewelry pieces to members of the public. At present, the investor side is “winning” this proverbial war, but expect a change as the second wave of record gold prices arrives later this year.

Most investors who trade in gold do so for diversification purposes, increasing their gold purchases when they feel that stocks and government-issued bonds are in trouble. These investors buy and sell digital gold using ETFs, trading it in a similar fashion to stocks and bonds. U.S. and Chinese ETFs are seeing historic inflows as investors are strongly voting for gold. As global trade uncertainty continues and both corporations and governments show signs of distress, investors are betting on gold as a lucrative investment. 

How do Central Banks Factor In?

Much like individual investors, central banks buy gold because it is a neutral and effective monetary asset compared to those issued by specific countries. Due to historical certainty of the U.S. dollar’s importance, the largest holdings among central banks are dollar-denominated. While the dollar will remain important, the prevailing consensus that the dollar is the only asset that matters is coming to an end. Because central banks want different assets, they are now buying more gold. Those purchases are likely to increase.

If you are an individual investor living in a particular country, you are highly dependent on the value of your native currency for your economic life. This is true whether you’re using Euros, pounds, yuan, or any number of other monetary units. However, issuers of these various currencies are signaling that they don’t have the same faith in the U.S. dollar as they once did, and they are buying gold to offset this concern. In fact, global investors purchased more than 1,000 tons of gold in 2024 alone, and they are buying even more as the price of gold rises.

Consumer Demand and Cultural Traditions

One additional offsetting factor influencing the price of gold is the market for gold coins, bars, and jewelry, creating physical demand for these products beyond storage vaults. Many cultures incorporate gold into their wedding traditions and other life milestones. India is just one example. Per a CNN article describing the custom, “India is the second-biggest consumer of gold in the world (slightly behind China), buying anywhere between 800 and 1,000 tons of the luminous metal every year, according to the World Gold Council.And this tradition is driving the country’s huge appetite for gold – which now accounts for a quarter of global demand.”A reporter for The Science Survey, reflecting on attending a Hindu wedding in 2025, noted that, “The jewelry is what seals the reputation that Indian weddings have as being glamourous and over the top. The bride, however, wears stacks of real gold. She is gifted gold from the groom’s family and her own to wear for her wedding. As such, many women who are married also wear their own real gold.” The cultural significance of gold in India goes far beyond weddings. According to the Royal Mint, “considered an auspicious symbol of affluence, a valuable asset, and a fundamental part of everyday life, gold symbolizes purity, prosperity, and sacredness, and plays an intrinsic part in Indian culture. Many celebrate rituals such as Ugadi, Pongal and Onam with gold, with Diwali and Akshaya Tritiya amongst the most popular, and celebrations such as ‘namakaran’ (a naming ceremony), ‘grihapravesam’ (a housewarming) and weddings are predominantly celebrated with gold too.”

Much like its neighbor to the southwest, China has a rich cultural history of incorporating gold into wedding ceremonies and other major life events. “Gold symbolizes fortune, power, and longevity in Chinese culture, so it is no surprise that for generations items made from the precious metal have been the most popular gift for wedding couples,” writes Annie Cheung of the South China Morning Post, “Gold accessories and jewelry have been part of Chinese culture since ancient times, although in the past only royalty and dignitaries could afford it.” Bride and Breakfast, an online magazine focusing on wedding planning, provides additional cultural context: “The importance of wearing Chinese wedding jewelry is a deep-rooted tradition that carries a plethora of symbolic meanings. The jewelry carries goodwill and well-wishes to the bride for a happy marriage from the older generations. Traditionally, it is given to the bride by the groom’s family as a heartfelt welcome to the new home. Nowadays, the bride also receives gold jewelry from her own families, giving her the genuine wishes for her newly married life.”

Because weddings in India, China, and other countries rely so heavily on exchanging and showcasing gold jewelry, many couples are growing nervous about rising expenses, with some electing to postpone their weddings based on the skyrocketing price of gold.

Coin Buyers’ Response to Economic Uncertainty

Despite anxiety among certain buyers, coin buyers have been highly responsive to the price of gold. However, they too are shocked by how quickly the value of precious metals has jumped. In the United States, many consumers were anticipating a momentary blip of increased prices on goods when the tariffs were announced, and they still haven’t felt the full effect of rising prices in their day-to-day activities. That began to change in early May 2025. CNN attributes this to the fact that, “a major shipping loophole expired at one minute past midnight on Friday. The de minimis exemption, as it’s known, allowed shipments of goods worth $800 or less to come into the United States duty-free, often more or less skipping time-consuming inspections and paperwork.” A CBS News report expands on this phenomenon, noting that “Consumers have already begun to ripple effects of tariffs in the form of price hikes on everyday products from footwear to mobile charging devices. Data from SmartScout, a price analysis software tool, shows that since mid-April, sellers on Amazon have raised their prices on nearly 1,000 products.”

In the early days of the tariff announcements, many expected prices to come back down to a reasonable level. This does not appear to be the case, unfortunately, and higher prices on consumer goods appear to be here to stay. Paradoxically, demand for gold coins was down in the U.S.as these tariffs were announced. In the past, economic uncertainty would result in long lines outside of retail gold stores, with month-long wait times for products on coin websites. That’s no longer the case.

What Happens Next?

Individual consumers are now asking, “how do I get the gold I want, and what will the price be?” This is leading to fear of missing out, and demand for gold is once again on the rise worldwide. What’s the takeaway from all this emerging data on the price of gold and growing demand? Expect a bull run on gold coin and bar markets soon, and act accordingly.