Gold still shines: Why the world keeps turning to the yellow metal

Few things transcend borders, classes, and eras quite like gold. From roadside vendors to national banks, its enduring allure is shared by all, particularly in uncertain times. And as we head into 2025, the glittering metal is poised to shine even brighter.

Gold has always been more than just a commodity. It’s a hedge against uncertainty, a symbol of stability when the world feels anything but stable.

For decades, its value has climbed steadily, unfazed by the ups and downs of global currencies like the dollar and the euro.

Last year, gold yielded a 27 percent annual gain, which is the biggest since 2010, reaching record highs several times. This trend is unlikely to reverse in 2025, according to financial experts, as political shifts and economic turbulence push more investors toward gold’s reassuring gleam.

Bayram Veli Salur, Chief Investment Officer at the Istanbul-based Kuveyt Turk Asset Management points to gold’s unique role as a counterweight to the US dollar. “A strong dollar typically weighs on gold prices, while a weaker dollar is supportive,” he explains to TRT World. With many nations exploring alternatives to the dollar, gold is increasingly seen as a safe and valuable reserve.

This growing interest in gold is not just about economics but also a response to shifting global power dynamics.

Geopolitical rifts have deepend in recent years, from the Ukraine war to increasing tensions between China – the world’s second biggest economy – and the United States. These shifts have prompted Moscow and Beijing – as well as many Global South countries – to move away from the dollar, aiming to develop alternative financial exchange means under groups like BRICS, a non-Western political and economic alliance.

US President-elect Donald Trump’s America First policies and Western sanctions on Russia and other countries might also lead to the dollar's de-globalisation process making many global central banks buy more gold than dollars, according to analysts.

Moving from dollar to gold

Reducing reliance on the dollar has led to favouring gold instead. Central banks around the world are following suit, buying gold in record quantities—nearly 700 tonnes in 2024 alone, according to estimates.

“Efforts to diversify reserves away from the US dollar alongside concerns about potential future conflicts with Washington may lead global central banks to increase their gold holdings. Such a trend could push gold prices to new highs in 2025,” says the top asset manager.

This growing preference for gold is not just a rejection of the dollar but a broader response to economic unpredictability.

The US dollar has been the world’s leading reserve currency since WWII, which paved the way for Washington’s financial and political supremacy alongside the Soviet Union, the former communist power. But in the post-Cold War era, the US wars from Iraq to Afghanistan have hit the popularity of the dollar.

Now there is also definitely the Trump factor.

If US President-elect Donald Trump turns to protectionist economic policies, as he has long promised, and imposes extra tariffs on China as well as new restrictions on immigration policies, all these may increase inflation in the US, and add to the appeal of gold as a safeguard against fiscal instability, according to Gokhan Ovenc, an academic in the faculty of economics at Istanbul University.

While economists differ on inflation’s effects on the gold rush, many believe that in the era of higher prices the yellow metal is just a safe haven. “Rising inflation expectations bolster gold as it serves as a hedge against inflation,” says Salur.

"In my opinion, political and economic risks, non-dollar and yield-sensitive demand from de-dollarising central banks and investors seeking a hedge against fiscal instability, as well as sticky inflation, will support another year of gains for gold," said Ole Hansen, head of commodity strategy at Saxo Bank.

Gold is bold

While central banks make headlines with their purchases, ordinary people are also flocking to gold. Jewellers in Istanbul report brisk business, with many customers citing gold’s reliability compared to fluctuating interest rates or currency values.

“Gold has outpaced interest rates and feels far more secure” says Hasan Demircivi, an Uskudar-based jeweller with over 20-years experience.

“In 2025, I personally believe that gold will have a higher value than other commodities,” adds the Turkish jeweller.

His customers share his optimism, predicting prices will soar past $3,500 per ounce in 2025.

Murat Baris, another Uskudar-based jeweller also believes the yellow metal’s value will increase in 2025. “The dollar rusts but gold does not,” Baris, who has worked in the gold industry for more than three decades thanks to the family enterprise, tells TRT World.

One of his customers, Umran Bire, chimes in: “I prefer gold as it will yield more returns in the future.”

What the Fed does matters for gold

Analysts at Goldman Sachs Investment Bank predict gold could reach $3,000 per ounce by the end of 2025.

This optimism is rooted in a confluence of factors: geopolitical uncertainty, inflation fears, and potential interest rate cuts by the US Federal Reserve, Ovenc, the economist at Istanbul University tells TRT World.

According to some forecasts, the Fed will reduce interest rates multiple times in 2025, boosting the money supply worldwide and leading to favourable conditions for individuals to invest in gold, says Ovenc, This means that the value of this precious metal is likely to rise due to increased demand, adds the economist.

“Rate cuts generally support higher gold prices by lowering the opportunity cost of holding non-yielding assets,” adds Salur.

“If Trump pursues policies that will undermine the independent character of the American central bank, this will further increase the trend towards gold,” Ovenc projects. Among various factors, “the relationship between Trump and the US central bank will determine the level of the gold rush,” he adds.

But Salur also draws attention to another economic scenario favouring Trump and American finances. “A strong US dollar, high US bond yields, easing geopolitical tensions, and a slowdown in rate cuts could temper gold’s momentum compared to 2024,” he says, underlining the fact that gold’s value rose 13.1 percent in 2023 and doubled in 2024, reaching its peak.

Even though new record highs are quite possible in 2025, Salur’s confidence in strong gold rises is “tempered” by a possible financial scenario favouring US economics. “Consequently, maintaining a high allocation to gold in portfolios might not maximize returns in 2025,” he adds.

While analysts like Salur weigh the financial factors that could influence gold’s trajectory, others see its value as something deeper and more enduring.

Fatih Kul, a deli worker in Istanbul, offers a philosophical perspective, noting that gold’s rise isn’t just about economics; but also about human psychology. As he puts it, “Gold has been humanity’s currency since the beginning of time.” In an era of rapid change and persistent conflict, its timeless value remains unmatched.