Why did gold prices skyrocket to record highs?

Gold prices hit an all-time high this week. Why are they so high? Let's find out!

The gold rush comes as markets around the world continue to panic over Trump’s tariffs, which are widely expected to raise prices for consumers. The trade war has also created huge uncertainty for businesses and investors. It has also fueled global tensions between the United States and its largest trading partners — and raised fears of a growing recession.

Here are three things to know about the forces driving the rise in gold prices.

Gold prices rise sharply due to tariffs

Gold prices have been rising steadily for years, but really peaked in early 2025.

Some analysts predict prices will continue to rise. Michael Widmer, head of metals research at Bank of America, published a report last week predicting gold prices will soar to $3,500 an ounce (0.829 ounces) in the next 18 months.

In an interview with NPR, Widmer said many factors have contributed to the multi-year rise in gold prices — but the recent surge is "almost entirely driven" by fear and uncertainty related to tariffs.

Gold may be known as a "safe haven" — but it can be volatile

Despite its price gains over the years, Widmer cautions that gold can be volatile. However, gold has long been seen as a safe haven in the so-called “fear trade.” As a precious metal that can be held (and hoarded!), gold offers a safe, solid look alongside stocks and other (often less physical) financial instruments.

“ When it looks like the world is about to collapse, gold often goes up, ” said Lee Baker, a financial planner, founder and CEO of Claris Financial Advisors in Atlanta.

But rushing to buy gold may not be right for everyone.

Baker warns that there are downsides to buying and owning gold — even during a crisis. For example, unlike stocks or bonds, buying gold doesn’t pay dividends or interest. So the only way to make money on this investment is to buy some and then hope to sell it later when the price rises.

Investing in gold also presents physical and logistical challenges — especially for those who want to buy physical gold. For example, buyers need to consider how to store their gold — and whether to pay for the security and insurance required to keep the precious metal in their home.

For those curious about gold but perhaps not ready to adopt a crisis-preparation lifestyle, Baker notes that it is possible to invest in gold-backed funds that do not require actual ownership of the precious metal.

However, “ if you’re buying gold right now just because you’re caught up in the craze, because the price of gold is going up — I would probably advise you to hold off ,” he said. “ Because it could lead to some disappointment .”

Baker said the current gold rush highlights a larger lesson about investing in more than one asset class, such as stocks.

“Don't put all your eggs in one basket. That applies to investing too.” “Diversification is important.”