Gold may still be bullish, but is its safety overrated?

Gold is up more than 15% year-to-date, surpassing the important $5,500 milestone this week.

The precious metal’s rally, accompanied by a lift in commodities such as silver and platinum, has been driven by several interrelated factors, including geopolitical tensions, rising government debt, and an uncertain outlook for interest rates and inflation.

Gold’s appeal is linked to the narrative that it is a safe haven asset, acting as a “hedge against inflation”. It generally rises in value when the dollar falls, it is easily sold, and it is also a solid, limited commodity.

These factors are important at a time when questions are being raised about the dollar, as well as fiat currencies like the Japanese yen. As government debt rises, so do fears of inflation and financial stability.

In the US, the Trump administration’s firebrand policies are fueling market jitters around the health of the economy, which some analysts see as a “sell America” ​​trade. In recent weeks, the president has threatened to conquer Greenland, hinted at US intervention in Iran, sought to influence policy at the Federal Reserve, and launched an attack on Venezuela. On top of that, he has also threatened more tariffs on trading partners, bringing back the well-worn strategy from 2025.

Although analysts argue that the dollar won’t take off as the world’s reserve currency anytime soon, investors are diversifying away from the greenback. America’s next move is uncertain, and no one wants to be in the crosshairs. As an alternative to fiat currencies, gold can seem like a strong portfolio choice.

“Investors previously bought U.S. Treasuries because they were seen as risk-free. But especially because some assets have been weaponized, certain countries are becoming more cautious about how they allocate their capital,” said Simon Popple, managing director at Brookville Capital. “The devaluation of the dollar helps the price of gold,” he told Euronews.

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Still, Popple and other analysts insist the key factor driving bullion prices is far less complicated. As gold continues to make headlines, investors are caught up in buying and selling.

“People naturally gravitate to things they see moving and they’ve seen the gold price rally surprisingly,” said Chris Beauchamp, chief market analyst at IG. “It’s bound to lead to an ignition of interest.”