Proving its value, gold prices surging all time high in 2025. According to a news report by ITV news, gold prices are fueled globally that even if you have insurance it may not cover it. Historically, the price of gold has been stable. The financial crisis of 2008 is a perfect example of a significant event that may cause an increase. In 2011 the European economy faced uncertainty, covid in 2020 did the same and more recently prices have skyrocketed by policies and norms by the U.S. President. Economists say, people invest in gold when other investments seem risky. Furthermore, excessive buying of gold by central banks is contributing to the rise of gold prices in the international market. Let’s discuss it in detail.
Table of Contents
How does an economic crisis impact gold prices?
Yellow metal is considered as the safest investment since the millennials. Even a minor disturbance sets the price of gold high. From economic crises to war, even natural disasters, the gold rate is highly sensitive to such stimuli. Let’s understand demand and supply. It has an invisible hand, when the demand is high, supply is low that leads to high rates, vice versa supply is abundant then the demand is low which means prices will be low. Let’s discuss the historical events that impacted the gold rates.
2008 financial crisis
One of the most chaotic times in modern economic history, the 2008 Global Financial Crisis had a significant effect on investor behavior and international markets. The gold prices just doubled from above $825 to over $1,650 per ounce following the Lehman Brothers collapse in 2008 as U.S. Federal Reserves implemented slashing interest rates.The rates were volatile because the investors found gold to be the safe haven asset at that moment.
European Economic Uncertainty in 2011
In 2011 the European Economy was riveted by uncertainty. This was due to a large eurozone being unable to repay the debt. Several member states, including Greece, Ireland, Portugal, and Spain, faced unsustainable debt levels, leading to fears of potential defaults and the need for international bailouts. Historically , gold has been seen as the safe space or store of value in situations of crisis. This made gold a preferred hedge against systemic risk and potential currency devaluation.
Covid-19 Pandemic, 2020
As the pandemic spread rapidly from China to the rest of the world, the whole world came to halt as the government had to impose strict lockdowns. These lockdowns lead to disruptions in economic activities all over the world. The stock markets crashed, real estate rates went down and the gold prices surged.
US Policies and Tariffs
With the recent legislative moves by the US president, like the introduction of tariffs and economic sanctions, there’s been a wave of uncertainty that has investors flocking to gold as a safe haven. For instance, in April 2025, gold prices hit record highs when new tariffs were rolled out, although they dipped slightly afterward as the official stance became more relaxed.
Central Bank Purchases
If we observe the previous three years, central banks around the globe have been buying over 1,000 tonnes of gold aggressively each year shattering records across the board. This rise largely depends on concerns about currency stability,rising inflation and geopolitical tensions.
Conclusion
Gold is considered a safe-haven when every other investment seems risky. It is considered a safe investment during the time of crisis. Historically, the price of gold has gone up when there’s inflation or devaluation of currency. Gold can diversify investments unlike stocks and bonds. All these reasons make gold attractive to investors. It is not only easy to buy or sell quickly because of its broad acceptance and liquidity but it reduces the risk of investors losing value.
Note- Data Source All the data is taken from moneycontrol.
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