GOLD
Gold is a precious metal that has long been valued because of its rarity and beauty. Gold has been used historically as a medium of exchange or just as a practical way of preserving wealth. The commodity continues to be used in jewelry and even in electronics. Gold remains the ‘safe-haven’ instrument of choice for traders and for many who don’t trust that their nation state’s currency will retain its value. History shows that gold tends to maintain its value, and in the midst of a trade war, this is important.
• GOLD AS A SAFE-HAVEN INSTRUMENT VS. MORE VOLATILE INVESTMENTS
Investors turn to (‘safe-haven’) gold during times of economic uncertainty and geopolitical instability because of its less volatile status. While crude oil or palladium are seen as volatile instruments that experience large price swings in a short period of time, gold tends to keep its value. The recent surge in gold prices could be attributed to:
- Geopolitical Tensions: The conflicts in Ukraine and the Middle East have created an atmosphere of uncertainty, prompting investors to seek the security of gold.
- Economic Instability: The trade war, inflation concerns, and fluctuating economic indicators have made gold an attractive option for preserving wealth.
- Global Fear of Escalation: Potential confrontations involving global superpowers further exacerbate fears, driving up the demand for gold.
• GOLD: FACTORS THAT COULD INFLUENCE PRICE MOVEMENTS
When conflicts or global instability arise, investors often turn to gold as a safe-haven instrument. Events like wars, political unrest, and economic sanctions could drive up demand and influence its price. Interest rates also play a key role—lower rates make gold more attractive, while higher rates increase the appeal of interest-bearing instruments, potentially reducing gold demand.
Gold prices are also shaped by supply and demand. Mining output affects supply, while demand is driven by jewelry, technology, and investment use. Additionally, economic indicators such as inflation, GDP growth, and employment data could impact gold prices. Strong economic data could lower gold prices by boosting confidence in traditional investments, while weak data could push investors toward gold.
• G7
The G7 is a group of the world’s seven most advanced economies, including the US, UK, Germany, Japan, Canada, Italy, and France. Russia was previously a member but was expelled in 2014 after annexing Crimea from Ukraine. The G7 Summit takes place once a year. This year it will be held in Canada from June 15 – June 17, and leaders of G7 countries are expected to discuss trade (tariffs, trade deals) and geopolitics (Ukraine, the Middle East in particular).
• G7 and gold prices
While it’s true that the G7 doesn’t usually have a major impact on the markets, the meeting has impacted instruments like Gold and stock prices to some degree in the past. A recent major controversy that caused gold prices to rise was the G7 summit of 2018. President Trump slammed Prime Minister Trudeau as dishonest and denounced the traditional joint communique and left early. In the May 2025 G7 Finance meeting, US Treasury Secretary Bessent suggested a 50% tariff threat on EU goods was legitimate, as gold prices grew. With President Trump back at the White House and trade war tensions remaining high, there is a chance of disagreement between G7 leaders, which could send traders to the safety of gold.
• Gold in 2025: Will the uptrend continue?
Gold prices have hit all-time highs, most recently in April 2025. The trade war is the current driving factor for gold and multiple instruments. Recent 90-day delays in tariffs to allow negotiations caused traders to switch to more volatile instruments. But how much progress is there in trade talks, and will the US re-impose high tariffs if talks fail? In geopolitics, Russia and Ukraine are involved in a ceasefire agreement, but the two remain far apart, and it is not expected that the conflict will end soon. US–Iran talks about the latter giving up its nuclear program have been ongoing, but show little signs of progress. The US has said it could militarily strike Iran, and Israel is reportedly ready to do so. Iran has threatened to close the crucial energy transit route, the Strait of Hormuz, if attacked.
Conclusion
Geopolitical tensions and conflict have been a feature of recent years. Certainly, it’s possible that the trade war could end, that peace deals could be signed, and that political disagreements will calm. If so, gold prices could be under pressure. However, at least for now, there are few signs pointing toward a more peaceful and cooperative global climate.