Gold prices are expected to reach record highs as global investors split from the US dollar into “safe shelter” commodities, with African gold-rich people hoping to boost the economy.
Gold is currently trading at a historic high of around $3,350 per troy ounce, strengthening more than 25% since the start of the year. The price of gold appears to benefit from a decline in confidence in the US dollar as a result of President Trump's imposing drastic universal tariffs.
The Ice US Dollar Index, a major benchmark for measuring the international value of the dollar, has fallen by more than 8% since January.
Assets that have been removed in greenback or dollars, such as Treasury bills, tend to be perceived as very safe investments, but political and economic risks in the United States have been rethinking some investors and have opted for gold instead.
Oliver Blagden, gold and basic metal analyst at CRU Group in London, told African businesses that “trust in the US dollar is undoubtedly a major contributor to driving gold prices.”
“Recent events and policies from the White House have caused disruption in the global market. With increasing uncertainty and risk in stocks and bonds and reduced sentiment, it has led to significant investments in gold,” he says.
“The events over the last few weeks have reminded us that the traditional attitude of putting gold in gold in times of uncertainty is still strong. Gold is considered a safe and stable asset worldwide,” adds Blagden.
Welcome news for Gold Minors
Stronger gold prices are welcome news for major African gold exporters such as Ghana, South Africa, Mali and Burkina Faso. In 2023, the continent accounted for about 25% of the world's gold production, producing around 840 tons of precious metals.
Gold exports play a particularly important role in the West African economy, such as Ghana. In 2024, gold production contributed more than 12% to Ghana's GDP. In the same year, exports of goods accounted for almost 60% of the country's total export revenue, making them an important source of foreign exchange.
Therefore, rising gold prices will allow African gold exporters, including Ghana, to benefit from higher foreign exchange revenues. Second, this could boost central banks' foreign reserves and stabilize the domestic currencies. Increased government revenue from taxes paid by gold producers and mining companies could also ease financial pressure and support public investment initiatives.
Countries look dollarise
Blagden suggests that Kim's long-term outlook will “seem very bullish.” He points out that Trump's trade war has given many countries, particularly the BRICS group in emerging economies, to seek economic “independence” from the United States. To this end, central banks are increasingly diversifying away from the greenback and replacing it with gold. The central bank has been purchasing more than 1,000 tonnes of gold each year since 2022 and plans to do the same this year.
“The derailment has become more pronounced in recent years as BRICS countries appear to be independent of the US dollar and the economy,” Blagden tells African businesses.
“The past few weeks have been a call for awakening of the whole world, whether it's currency or trade-related, as countries look to “independence” from the United States,” he says. “This is a huge advantage for money.”
Most analysts expect gold prices to continue to rise from current levels. It should be noted that Goldman Sachs expects the price to reach $3,700 per ounce by the end of 2025, and could reach $4,500 per ounce in an extreme scenario. Morgan Stanley is forecasting $3,400 by the end of the year, with UBS suggesting it is slightly higher at just $3,500/ounce.
Blagden says that “it's difficult to know what the next move will be from the oval office, and that creates more uncertainty.”
“Like some people say, I don't think it's going to be over $4,000,” he points out. “But the chances that it will rise from here are still very strong.”
