Why does gold keep reaching all time highs? We explain it for you.

A dummies’ guide to why gold prices are going up

While it hasn’t made waves for the past few years, there is no hotter commodity drawing attention right now as gold. 2025 was the year when the world saw an exponential increase in the value of gold, from over US$2,900 per ounce in Feb, to US$3,300 in Apr, to US$4,200 in Oct.

2026 saw a steep increase in prices and new records being set, crossing the US$5,000 benchmark and hitting its highest value so far at US$5,600 in Jan. In the past 32 months, gold prices spiked by more than three times, making it the largest increase since Aug 2011.

But why is this happening in the first place? Why does gold always get compared to the US Dollar (USD)? How does it matter to the rest of the world?

Here’s a simple breakdown.

When the world loses trust in the US, gold prices increase

In Feb 2022, about €260 billion of the Russian Central Bank assets that were held in Europe were immobilised by the American government and the other G7 countries at the height of the Russia-Ukraine war. While only US$5 billion of its reserves were frozen in the US, it created fear amongst countries that the US could take back its USD at any given moment.

The value of gold also rose by 3% at the height of the Israel-Gaza war in Oct 2023, and continued to rise when President Donald Trump announced his Liberation Day tariffs in Apr 2025, which brought chaos to the world’s trade and economic system.

All in all, with people losing trust in the US and the USD, it has caused the gold prices to increase and the USD to drop, especially in times of war and economic uncertainty.

With Trump creating uncertainty in the global economy, other countries turn to gold for stability

With the uncertainty that Trump has brought with his radical trade policies, many countries’ central banks, such as Serbia, Poland, China, the Czech Republic and even Singapore, are looking to gold as a safer alternative for their investments, and showing that they are looking for a more stable form of investment over the USD.

Most notably, China has emerged as the biggest producer and consumer of gold in the world, which can be tied to a buying spree the country embarked on since late Nov 2024. Since then, they have been public with their efforts to create or help facilitate a new system that is less reliant on the USD, which led them to open their first gold vault in Hong Kong in Jun 2025 through the Shanghai Gold Exchange (SGE).

The SGE is the heart of China’s “gold corridor”, a network of vaults across BRICS countries: Brazil, Russia, India, China and South Africa. Doing so achieves two goals for China: more countries are incentivised to hold Yuan in their reserves, while also allowing China to possess more gold from these countries.

Overall, these actions internationalise the Yuan as a global currency and reduce the world’s dependency on the USD.

The devaluation of the USD and what it means for the world

In 2026, Trump continued to make more tariff threats, from 25% tarriffs to the EU and South Korea to new penalties for countries that sell oil to Cuba. He has also shocked the world after expressing a firm interest in taking over Greenland from Denmark, and most recently, he threatened to launch a military strike on Iran.

Regardless of whether Trump’s threats materialise or not, there is no denying that the uncertainty brought has destabilised the world’s economy. Kristalina Georgieva, the Managing Director of the International Monetary Fund, summed it up by saying: “Uncertainty is the new normal, and it’s here to stay.”

While the US remains central to global finance and trade today, Trump’s “America First” continues to show that the US has become an unreliable trading partner. This has led other countries to form alternative trade and currency networks for stability, from new trade agreements to more stable assets like gold.

Simply put, as long as the world is experiencing multiple humanitarian crises and extreme economic uncertainty, people will part with their USD and reach for gold, whether the US likes it or not.

Read more stories we’ve written on the latest news and trends here.

Featured Image Credit: Freepik