International gold prices hit new highs: Behind the rise

On February 10, 2025, the international gold price hit a high of $2876.78 per ounce, why the gold price continued to rise? What are the influencing factors behind it? What is the future of the international gold price? This paper will conduct in-depth analysis and exploration of these problems.

From the property of gold itself, it has the characteristics of preserving and increasing value. On the one hand, in the period of inflation, its preservation function is prominent, which can resist inflation, thus causing people to increase the pursuit of gold; on the other hand, in the period of deflation, its value-added characteristics appear, often due to the fluctuation of currency and other credit assets, and the price rises.

The Bank of America turmoil in April 2023 is closely related to the rise in gold prices. In October 2022, the international gold price once fell to about $1,500 per ounce, and in the following six months, its price fluctuations have been lukewarm, but since April 2023, after the bank collapse in the United States, the instability of the financial system triggered a decline in people's trust in the financial system, at this time, the international gold's hedging properties have been highlighted. Gold is on its way up again.

The Federal Reserve monetary policy is another uncertain factor affecting the international gold price. In September 2024, the Federal Reserve changed its decision to raise interest rates in the past and opened a new round of interest rate reduction cycle, and the international gold price seemed to be strongly supported, and continued to rise after an upward journey lasting about a year, especially after the Federal Reserve repeated interest rate cuts in November and December, the market's pursuit of the international gold price was bullish, resulting in the international gold price and continued to rise.

Geopolitical factors continue to add fuel to the rise in international gold prices. Affected by the Russian-Ukrainian war, international gold demand has risen sharply, and since the new round of Palestinian-Israeli conflict, international gold demand is "burning", especially after the escalation of the Palestinian-Israeli conflict to the Middle East war, the rise in international gold prices is added a new firewood, resulting in international gold prices are difficult to fall.

The addition of gold strategic reserves by central banks is another factor affecting the international gold price. Due to geopolitical reasons, countries around the world have caused political concerns, in this context, as a strategic reserve gold is "favored". Data show that in 2024, the total annual purchase of gold by global central banks is as high as 1045 tons, and the large amount of gold held by central banks is bound to boost the rise of international gold prices.

Media reports guide and the masses blindly follow the trend is another important factor promoting the rise of international gold prices. Since the new round of rise in gold prices in 2023, the instability of the financial system, the hedging function of gold, and the news of central banks holding gold have occupied a part of the information position of the general public, major media have increased coverage, and a series of financial investment institutions have frequently voiced. Under the background of rising gold prices, the masses' psychology of chasing up is increasingly strong, especially after well-known financial institutions such as Goldman Sachs and jpmorgan Chase said that they are still optimistic about the future rise of gold, the masses' blindly following the trend is increasingly enhanced, coupled with a series of fundamental factors to strongly support the price of gold, the masses' psychology of chasing up is even more difficult to kill. As a result, the demand for gold increased, causing the price of gold to stay high.

Trump's tariff policy is another important reason for the international gold price to reach a new high. Since the new US President Donald Trump took office on January 20, 2025, his policy of imposing tariffs on imported goods has aroused close attention from various countries. Especially after Trump signed the executive order on tariffs, the European Union, Canada, Mexico and other important economies have expressed their opposition to and condemnation of this policy, and the concern of countries around the world about the international trade situation has made the international gold price stand at a new high point.

To sum up, the rise of the international gold price is closely related to the inherent properties of gold itself, the stability of the financial system, the monetary policy of the Federal Reserve, geopolitical factors, but also with the central banks of various countries to hold gold strategic reserves, media guidance and the masses to chase up the psychology and the interest rate of the trade situation, the future of the international gold price will be how, it remains to be evaluated by various groups according to the above factors.

For investors, they should make reasonable risk allocation according to their own conditions, and at the same time, they should keep an eye on the financial policies and economic situations of various countries to make clear judgments. Governments of all countries should strengthen market supervision in a timely manner and increase rational guidance to investment groups, so as to promote a more stable and healthy development of the financial market.