Gold Prices Soar Amid Rising Geopolitical Tensions Fueling Demand for Safe-Haven Assets

By September 16, 2025, gold prices soared to unprecedented levels across various markets, with retail gold in China hitting a record 1,091 yuan per gram. This represented a notable rise since the start of the year, as prices jumped about 9.78 yuan per gram from the previous trading day. At the same time, the Shanghai Gold Exchange observed upticks in multiple gold contracts—the gold T+D contract, for instance, reached 836.03 yuan per gram, up 0.89% from its opening value of 829.48 yuan per gram. Other contracts, such as iGold 9999 and gold 9999, also saw gains, closing at 837.00 yuan and 836.00 yuan per gram, respectively.

The recent upswing in gold prices is linked to a combination of influences, including global political tensions, increased inflation, and changing investor attitudes. Experts point out that this price rally reflects larger trends in the global economy, such as higher interest rates and ongoing supply chain challenges. Notably, early 2020 saw gold markets transition rapidly from contango to backwardation as worldwide uncertainty from the COVID-19 crisis took hold. This shift sparked a dramatic jump in demand for physical gold, with investors flocking to safe assets during turbulent times. While contango—where future gold prices exceed spot prices—has typically been normal for this metal due to carrying costs, extended periods of contango may indicate excessive supply or weaker demand, which could put downward pressure on spot prices.

Market participants are watching the structure of the gold futures curve closely, since it reveals expectations for future supply and demand. An upward, or contango, curve usually reflects storage and insurance costs associated with holding physical gold, which is common given the metal’s storability and durability. A downward, or backwardation, curve shows the spot price surpassing the futures price, hinting at possible short-term supply shortages in the gold market. Shifts in the futures curve can directly affect investment tactics, especially for those using roll yield or opting for physical gold delivery.

The ongoing gold rally has also influenced other precious metals, such as silver. Silver prices moved higher as well, with the silver T+D contract climbing to 10,071 yuan per kilogram—up 0.77% from its opening level of 10,033 yuan per kilogram. However, unlike gold, silver tends to be more volatile and vulnerable to contango, owing to its greater storage expenses and lower market liquidity. This heightened volatility presents both risks and potential rewards, particularly for investors involved in arbitrage or options strategies.

In a broader context, gold has traditionally outshined most major asset classes during times of economic distress and inflationary pressure. Over the past half-century, gold has led the performance rankings for U.S. asset classes five times, especially during episodes of high inflation or financial market declines. Frequently, gold has provided a safeguard against risks in equities, property, and bond markets, making it a valuable element in a diversified portfolio. Still, gold has not been immune to steep drops, with losses such as 32% in 1981 and 28% in 2013, underscoring the necessity of maintaining a balanced approach when investing in precious metals.