Gold price explodes to record high: investors flee to the safe haven!

Gold price explodes to record high: investors flee to the safe haven!

The price of gold reached a historic high of $3,500 (€3,081) per troy ounce (31.1 grams) on Tuesday, April 22, 2025. This significant event marks an increase of over two percent compared to the previous day, after the price had already risen by almost three percent on Monday. The main driver of this price increase is the verbal dispute between President Donald Trump and Jerome Powell, the chairman of the US Federal Reserve. Trump is putting pressure on Powell to demand interest rate cuts and has criticized him as "Mr. Late" and a "big loser."

The gold price development comes in the context of increasing uncertainty in the US economy. However, Powell is reluctant to cut interest rates because he fears inflation risks that could be exacerbated by Trump's aggressive tariff policies. Concerns about a slowdown in US economic growth or even a recession are also present, economists say. Trump argues that inflation is currently low and believes a rate cut is necessary to ease the burden on the economy. Despite this claim, US consumer prices rose 2.4 percent in March compared to a year ago.

Price invasion and economic outlook

The commodity markets show that the price of gold has risen by almost 12 percent since the end of March, while it has increased by around a third in the year to date. In comparison, the price of gold had already increased in value by 27 percent in 2024. Historically, gold prices tend to rise following interest rate cuts by the Federal Reserve. The price of gold rose by around 30 percent during the interest rate cuts from 2001 to 2003, and in 2019 the triple rate cut led to an increase of around 18 percent.

However, current considerations of a rate cut by the Federal Reserve are influenced by geopolitical tensions and volatile market conditions. Economists warn that the trade tensions, sparked largely by Trump's policies, could pave the way for possible inflation as companies pass higher costs directly to consumers.

Gold as a safe haven

Experts continue to emphasize gold's role as a “safe haven” in times of economic uncertainty. The rise in gold prices could be signs that investors are shifting their money to lower-risk investments in turbulent times. Long-term factors such as geopolitical tensions, supply and demand in the gold market, and the performance of other asset classes play a crucial role in price developments. A look at historical trends shows that investors should remain patient and monitor market developments over longer periods of time before making buying or selling decisions.

The current market situation clearly shows that the price of gold remains volatile under the influence of economic policy developments and geopolitical tensions. The question of whether the trend will continue or whether a stabilization will occur remains exciting and could have a lasting impact on the financial markets.

In this context, it remains to be seen how the Federal Reserve will respond to the current economic challenges and what further measures it will take to protect the US economy. Investors should be aware that decisions regarding the purchase or sale of gold should always be based on a complete analysis of the market situation.