Gold prices rose sharply during the current year, crossing the 3,000 -dollar barrier, which is its highest level in history, according to a report published by Forbes.
This increase represents a 14% increase since the beginning of the year and 38% over the past 12 months. But with fears of global economic stagnation, the question arises: Can these concerns lead to the decline in gold prices?
What prompted gold prices to this record height?
Forbes notes that there are several main factors that contributed to this sharp rise:
- American trade tensions: US President Donald Trump imposed a new round of customs duties on the main commercial partners, prompting investors to resort to safe assets such as gold.
- Cash policies of the American Federal: Although the Federal Reserve (US Central) stopped lowering interest rates, speculation that the possibility of reducing them in the future has strengthened the demand for gold, as the low interest reduces the cost of an alternative opportunity to possess the precious metal.
- Increased purchases of central banksThe purchases of the global central banks of gold rose to a thousand tons in 2024, and this trend continued during the year 2025, which strengthened the demand for yellow metal.
- Fears of stagnation and economic instabilityEconomic fluctuations and the weak currency of currencies made investors turn to gold as a safe haven against inflation and financial uncertainty.
Does gold witness a price drop?
Although the possibility of the collapse of gold prices seems weak, Forbes warns of the possibility of a price correction, based on historical precedents of major correction operations:
- 1980Gold fell by 65% from 850 dollars an ounce to 300 dollars due to the American federal raising interest rates to 20% to fight inflation.
- From 1999 to 2001: A decrease of 38% from 400 dollars an ounce to $ 250 as a result of the sale of European central banks with large gold reserves.
- 2008: It fell by 30% from a thousand dollars to the ounce to 700 dollars after the collapse of Lehman Brazerz Bank and the global financial crisis.
- Years from 2011 to 2015: A 45% correction from $ 1920 an ounce to $ 1050 due to the federal reserve signals to raise interest rates.
- 2020 and 2021: A decrease of 19% from 2075 dollars an ounce to $ 1675 as a result of the recovery of the markets after the Korona pandemic.
What may lead to the correction of gold prices?
According to Forbes analyzes, there are several scenarios that may drive gold prices to decline in the coming months:
- The power of the American dollar: If the recession leads to an increase in demand for the dollar to be a safe haven, gold may decrease due to the opposite relationship between them.
- The sale of gold investors due to a liquidity crisis: In the event of a deep economic stagnation, investors may resort to selling gold to cover their losses in the financial markets.
- Raise interest rates: If the central banks, especially the federal reserve, raise interest rates after the recession, this may reduce the attractiveness of gold compared to the revenue assets.
Although gold has reached record levels, fears of stagnation may lead to a price correction, not a complete collapse. While gold remains a safe haven in times of crisis, any changes in monetary policy or the recovery of the US dollar may push gold prices to decline.
