Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Gold gained 5% in February to reach $5,222 per ounce, taking its year-to-date return to about 20%, according to the monthly report of the World Gold Council (WGC).
Performance in other currencies, however, was mixed. A sharp appreciation of the Indian rupee following tariff relief with the United States pushed local gold prices down by 3.5%. Similarly, a surge in the Chinese renminbi led to a decline in local gold prices in China.
Gold’s gains during the month were supported by a weaker US dollar and softer US Treasury yields. Strong buying during Asian trading hours also helped prevent a deeper pullback earlier in the month, the report said.
The yellow metal had already been on a strong upward trajectory, having more than doubled between 2023 and 2025 before crossing the $5,000-an-ounce mark in late January. It later reached a record high above $5,595 an ounce toward the end of that month.
Gold also received modest support from investment flows. Exchange-traded funds (ETFs) added $5.3 billion in February, equivalent to about 26 tonnes of gold. The inflows were led by North America and Asia, while Europe saw outflows of about $1.8 billion, or 13 tonnes.
The World Gold Council said the current environment of dollar weakness, policy uncertainty and geopolitical tensions tends to favour gold as a safe-haven asset. Continued diversification by central banks into gold is also providing structural support to prices.
At the end of February, the eruption of tensions in the Middle East further lifted bullion prices. Oil and the US dollar also rallied during the same period. Gold gained roughly 5% across two trading sessions following the escalation.
Historically, the metal has responded positively in about two-thirds of instances when geopolitical risks spike significantly.
The longer-term rally in gold is also linked to a structural shift in global reserves management. Since the outbreak of the Russia-Ukraine conflict, central banks—led by the People’s Bank of China—have collectively added more than 4,000 tonnes of gold to their reserves, according to World Gold Council data.
Expectations of lower interest rates are another factor supporting the metal. A lower interest-rate environment generally benefits gold because bullion does not yield interest, making it relatively more attractive when returns on bonds decline. Rising global debt levels and fiscal deficits have also strengthened gold’s appeal as an alternative store of value.
However, the report noted that high prices could act as a deterrent for some investors. Should financial flows contribute to stronger economic growth in regions such as Europe or Japan, gold could become relatively less attractive in markets where equities and growth prospects improve. The WGC said this was already visible in Europe, where some investors booked profits after the sharp price surge in January.
