Market News

BY Edward Helmore in New York

New York’s famous Diamond District was teeming last week. But the subject on many minds in the city’s jewelry district was not diamonds but gold.

Covid, Ukraine and now Donald Trump’s trade wars have all sparked new interest in gold – which can trace its history as a currency back to 600BC.

On West 47th Street, gold trader Becky Algozhoeva at GT Findings was showing coins and ingots stamped with the Roman goddess Fortuna, also known as “Lady Fortuna”, to customers.

“Regular people are thinking gold is the key. They don’t even believe in banks any more because the economics are shaky, and they don’t even want to invest in institutions. They want to have it under their pillow. And gold doesn’t go bad. It’s not milk, right?”

The price of gold is up more than 20% since Trump’s election in November, and 95% over the past five years. Gold prices have declined from the record of $3,500 an ounce set last month, partly on expectations that Trump will further dial down trade tensions. But gold bugs love uncertainty and it seems likely there is more of that to come.

Every mention of gold by government officials, in the media, on Instagram and TikTok, was contributing to it coming back as “the only currency that is recognized universally”, said Algozhoeva.

Over the first few months of the year, US demand has grown so great that traders started sending 400-ounce gold bars from London vaults to Switzerland, where they were converted into kilo bars and sent to the US in the hold of commercial airliners, four tons at a time.

“It’s been unprecedented,” says Philip Newman, managing director of the precious metals consultancy Metals Focus. “We saw some rise during Covid but this has been more structural and long-lasting.”

As a result, US gold inventories have doubled, with more than 20m ounces, or roughly 600 tons, being transported into vaults in New York City. In February, JPMorgan alone said it planned to deliver $4bn of gold to the US, according to filings on the US Comex exchange.

After last month’s disappointing US economic growth numbers, some economists said that an unusually large amount of non-monetary gold – bullion, gold coins, unwrought gold, semi-manufactured gold and gold scrap – had accounted for some of the jump in imports.

Since the beginning of April, when it became clear that the US would not tariff gold and silver, the market has quieted down. But there’s no sense that it will remain so. “There’s uncertainty over what Trump will do tomorrow, and that uncertainty is ongoing,” Newman says.

The gold rush of 2024 may be more deep-seated than an attempt to offset Trump’s US-led trade war and concerns about the global economy and rising debt levels. Central banks have been buying gold to diversify assets since Russia’s invasion of Ukraine in 2022 at double the annual rate – 1,000 tons a year – over the previous decade.

In the final quarter of 2024, when Trump won the US election, central bank purchases accelerated 54% year-on-year to 333 tons, according to an estimate from the World Gold Council (WGC).

Michael Widmer, a commodity strategist with Bank of America, told Reuters that central banks should increase their reserves by 11,000 tons of gold. “Emerging market central banks currently hold around 10% of their assets in gold,” he said. “They should really hold 30% of their assets in gold.”

At the same time, it’s not only central and commercial banks that are buying more gold. Consumers purchased 13% less gold jewelry but increased purchases of bars and coins in 2024 by 3% to 325 tons. Overall. The first quarter of 2025 was the second-strongest on record for global gold exchange-traded fund (ETF) inflows, according to the WSG, as investors poured $21bn into the gold-owning investment vehicles in the first three months of the year.

Earlier this month, Wells Fargo estimated that the retailer Costco was making $100m to $200m a month by selling gold bars. The company began selling 1-ounce bars made of nearly pure 24-karat gold priced at about $2,000 last year. In October, Costco’s chief financial officer, Richard Galanti, told investors, “they’re typically gone within a few hours.”

Despite the recent drop in gold prices, many see no immediate end to gold fever. Deutsche bank expects bullion to hit $3,700 an ounce by next year, and the billionaire investor John Paulson told Reuters that central bank gold buying and global trade tensions were likely to push bullion prices to near $5,000 an ounce by 2028.

Paulson’s fund, Paulson & Co, is reported to have earned $3.7bn on a 2007 bet the subprime mortgage boom would end in collapse, as it did. Paulson & Co is already the largest shareholder in Idaho’s Perpetua goldmine and earlier this month bought an $800m, or 40%, stake in NovaGold’s Donlin gold project in Alaska from Barrick.

“As central banks and people look to put their money in a more stable source … I think gold will increase its position in the world,” Paulson told Reuters. He said western confiscation of Russia’s foreign reserve holdings after Moscow’s invasion of Ukraine was a catalyst for the world’s central banks – especially China’s – to pile into gold.

Related: Gold has surged amid economic uncertainty. Should you buy some?

“When the war started, [Russia] kept their physical gold, that was safe, but all their cash – the paper reserves – were confiscated,” Paulson said. “So that caused other central banks to wake up and say … ‘What happens if there’s a conflict with the US? Could the US keep our treasuries, and all our savings would disappear?’”

But gold fever, with the metal’s long historical record as a desirable asset goes beyond Costco survivalists, central banks and money managers.

“It’s the only thing you can trust, right?” ventured Konstantin “Gino” Popolis, a manager at Green Diamond buyers. “It’s the only thing that can prove you have assets. Nothing else. There’s no more digital, no AI, no bubbles, no shortages. With gold, you have the proof.”