Onome Amuge
Gold ended 2025 on a note few asset classes could rival, let alone surpass. By December 23, the precious metal had climbed to an all-time high of about $4,449 per ounce, its 53rd record peak in a single year, before easing slightly to close the year at $4,368 per ounce. That closing price still represented a 67 per cent gain for the year, one of the strongest annual performances in modern financial history and a result not seen in more than four decades.
For Nigerian analysts accustomed to tracking oil prices as the main global commodity barometer, gold’s 2025 performance deserves special attention. It was not just a story of a rising price; it was a story of how global uncertainty, geopolitics, trade wars, currency volatility and central bank behaviour converged to reposition gold as the world’s preferred financial refuge.
Gold’s rise in 2025 capped an extraordinary run that began in earnest in 2024. Since the start of last year, the metal has recorded 95 all-time highs, according to data compiled from the London Bullion Market Association. The pace accelerated in 2025, with prices climbing steadily through the year and rising again in December.
December alone delivered a 4.2 per cent return, a strong finish that pushed the full-year gain to 67 per cent. This rally was not limited to the US dollar price. Gold set record highs in every major currency, from the euro and pound sterling to the Japanese yen, Chinese renminbi and Indian rupee. Differences in annual returns largely reflected foreign exchange movements rather than weakness in the gold market itself.
What drove gold so high?
Analysts at the World Gold Council, using a detailed Gold Return Attribution Model, estimate that about 60 per cent of gold’s 2025 return can be directly explained by measurable factors. At the top of that list were geopolitical risk and options market activity, especially between August and October, when global tensions and policy uncertainty peaked.
Options activity, often a reflection of fear, hedging and uncertainty, was particularly influential in December. Investors increasingly turned to gold-linked derivatives as insurance against market shocks. At the same time, a weaker US dollar, especially against emerging market currencies like the Chinese renminbi, added further support. Falling global bond yields also played a role, reducing the opportunity cost of holding a non-interest-bearing asset like gold.
The remaining 40 per cent of gold’s return was driven by factors not fully captured by standard economic variables. These included persistent central bank buying, trade-related anxieties, and speculative activity by commodity trading advisers and retail investors.
Central banks, particularly in emerging markets, continued to accumulate gold as part of a strategy to diversify reserves away from the US dollar. For countries watching sanctions, trade disputes and financial fragmentation reshape the global system, gold increasingly looks like neutral, sanction-resistant money.
Central banks and the quiet bid under gold
Although central bank purchases rarely make daily headlines, their impact in 2025 was profound. Official-sector demand acted as a steady, price-insensitive bid that underpinned the market even during periods of consolidation.
This behaviour helps explain why gold remained relatively stable compared with other commodities. Even in a bull market, gold has a natural self-correcting mechanism: high prices dampen jewellery demand while encouraging recycling. In 2025, that balancing effect was present but muted, largely because central bank demand absorbed supply without being deterred by price levels.
ETFs, futures and Western investors return
Another defining feature of 2025 was the return of Western investment demand. Global gold exchange-traded funds recorded seven consecutive months of inflows by December, dominated by North American funds. This marked a significant shift from previous years, when higher interest rates made gold less attractive relative to bonds and money market instruments.
In the futures market, managed money increased net long positions by about US$11 billion in December alone. While the total tonnage held by speculative investors fell slightly over the year, the value of those positions rose sharply, reflecting confidence in higher prices rather than excessive leverage.
This pattern indicates that gold’s rally was not driven by reckless speculation, but by deliberate portfolio allocation decisions in response to structural risks.
While gold’s rise was powerful, it was also measured compared with the explosive moves seen in silver and platinum towards the end of the year. December witnessed a remarkable climb across the precious metals complex, producing sector-wide returns not seen in 45 years.
Silver and platinum, however, showed clear signs of policy-driven supply squeezes. Tariff uncertainty, trade frictions and fears of restricted exports, particularly following China’s announcement of export licences for silver, triggered panic buying and sharp backwardation in futures markets. Prices spiked violently, only to reverse just as sharply when margin requirements were raised at the Chicago Mercantile Exchange.
Gold, by contrast, lacked the hallmarks of a squeeze. Its price swings, while larger than average, were far more controlled. This divergence highlighted gold’s deeper liquidity and the fundamentally different drivers behind its rally.
One of the most important lesson from 2025 is how gold has overtaken other assets as the world’s primary geopolitical safe haven. Before 2022, spikes in geopolitical risk typically benefited the US dollar and US Treasury bonds. Since then, and especially in 2025, gold has increasingly taken centre stage.
This shift reflects deeper structural changes. Trade wars, sanctions, tariff disputes and legal battles over executive authority, including challenges to US tariffs imposed under emergency powers, have created an environment of persistent policy uncertainty. Gold thrives in such conditions. Quantitative analysis shows that, in the short term, a 100-point increase in the global Geopolitical Risk Index is associated with about a 2.5 per cent rise in gold prices. When such events become frequent rather than exceptional, the cumulative effect is a higher baseline level of demand.
Recent tensions involving Venezuela, and the global market reaction to them, reinforced this narrative. According to analysts, while the headlines may fade quickly, the underlying anxiety lingers, and gold continues to benefit.
Monetary policy also played a significant role. By late 2025, markets were reassessing the path of US interest rates after stronger-than-expected economic growth. Historically, aggressive Federal Reserve rate cuts have coincided with falling long-term bond yields. This time, however, yields have been more stubborn, reflecting inflation concerns and heavy government borrowing.
This unusual combination, rate cuts alongside elevated inflation expectations,has historically been favourable for gold. While higher yields can dampen enthusiasm in the short term, inflation fears ultimately reinforce gold’s appeal as a store of value.
Speaking during high-level engagements on the margins of the Assembly, the Bank’s vice president for Power, Energy, Climate and Green Growth, Kevin Kariuki, said circularity can strengthen global value chains while supporting the clean energy and digital transitions.
“UNEA-7 comes at a decisive moment for our planet, and indeed for Africa,” Kariuki said. ”The Assembly offers an important opportunity to align science, policy, and finance to build a more resilient and sustainable future.”
The Bank’s position featured prominently during Leadership Dialogue 2, “Round and Round: Why circularity and sustainability are critical to the future of global industry.” Discussions highlighted Africa’s circular economy as an estimated $546 billion annual opportunity, with the potential to create more than 11 million jobs by 2030. Key sectors include construction, food systems, plastics, textiles, electronics, and mining-related value chains.
With nearly 50 per cent of global greenhouse gas emissions linked to materials and resource use, the dialogue examined how more sustainable material management can support the clean energy and digital transitions, while building resilience across critical industries.
Participants also stressed the importance of scalable practices, sound policy frameworks and social safeguards to ensure that circular transitions protect livelihoods while addressing environmental challenges.
For African economies facing intensifying climate shocks, volatile supply chains and rising input costs, circular approaches offer practical benefits. These include reduced reliance on imported materials, greater value addition within domestic and regional markets, and new investment opportunities in industries focused on durability, recycling and local production.
“Circularity reduces exposure to global supply shocks by keeping materials in use locally,” Kariuki said. He added that scaling up requires coherent, whole-of-economy policy frameworks, supported by predictable regulation, aligned incentives and standards that promote durability, safe design, and resource efficiency.
Dr Kariuki also held bilateral meetings to advance collaboration. Talks with Finland’s minister of Climate and the Environment, Sari Multala, focused on initiatives supported by the Africa Circular Economy Facility (ACEF), including the National Circular Economy Roadmap (NCER) programme and the AfriCircular Programme. Finland, alongside the Nordic Development Fund and the Coca-Cola Foundation, has been a founding partner of ACEF.
In a separate meeting with the new UNDP Administrator, Alexander De Croo, discussions explored closer alignment on shared priorities, including renewable energy under Mission 300, technical assistance through the NDC Hub and NDC Partnership, and joint work on the circular economy to deliver measurable development impact.
