Trump's Instability Fuels Global Gold Rush

Gold has become increasingly relevant in recent years due to its value as a safe-haven asset. For decades, it was considered largely irrelevant to the global financial system, but its importance is now growing.

The US abandoned the gold standard in 1971 and instead tied the value of the dollar to 'full faith and credit' of the US government. As a result, central banks gradually sold their gold holdings over the past 40 years, reducing its share of official reserves from an average of 50% in the 1970s to around 10% at the beginning of this century.

However, with each major crisis, such as the global financial crisis and COVID-19 pandemic, gold has benefited. The truly galvanizing event was Russia's invasion of Ukraine in 2022, which prompted many countries to flee US dollar assets for gold instead.

China, in particular, has been buying gold aggressively, with its central bank adding a net 20 tonnes in July alone, its biggest monthly gain in three years. The People's Bank of China has bought gold for an unbroken streak of 21 consecutive months.