Gold Breaks Five-Year Records: Investors Seek Safe Assets.

This week, gold posted its best results in the last five years due to significant interest from investors seeking safe assets following Donald Trump's trade speculation. The price of gold rose by over 6.5 percent, reaching a new high of 3,237 dollars per troy ounce. This is the largest increase since the onset of the COVID-19 pandemic in March 2020.

The panic in the market caused by the trade war in the U.S. prompted investors to abandon U.S. treasury bonds, which are typically considered safe assets. As stocks plummeted and the dollar began to weaken, investors sought safety in gold.

'The broad sell-off of American stocks and treasury bonds has undermined confidence in American assets and pushed investors to seek safety in gold,' says Alexander Zumpe, bar trader at Heraeus.

The weakness of the dollar makes gold more affordable for purchase in other currencies since the price of gold is defined in dollars. Meanwhile, traditional safe assets such as treasury bonds and cash dollars are no longer as attractive as they once were.

'It is not surprising that safe havens like treasury bonds or cash dollars are losing their allure, as they did during previous crises,' comments Peter Mallin-Jones, analyst at Peel Hunt.

Demand for gold is increasing this year due to investor interest and physical purchases by central banks looking to diversify their assets. It is forecasted that the price of gold will continue to rise and could reach a record 3,500 dollars per troy ounce in the next 12 months.

'We expect that central banks, financial institutions, and investors will further claim it after the events taking place now,' write analysts from the financial company UBS.

This indicates that the large sell-off of stocks and bonds, as well as threats of recession and declining bond yields, are affecting investors looking for safe assets. Gold, due to its stability and the depreciation of the dollar, is becoming an attractive choice for many. Also, gold-backed exchange-traded funds are becoming increasingly popular. Overall, this situation indicates uncertainty in the global market and demand for safe assets.