Gold Prices Rise As Cost Of Living Crisis Occurs

Gold prices are rising as investors seek stability amid shaky investment options, raising concerns about the impact on everyday Americans.

by Robert Segrest

Published Apr 23, 2025

6 min read

gold prices rise as cost of living crisis occurs

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Key Takeaways

A recent survey reveals that many investors are concerned about the rising cost of living and are choosing gold and other precious metals as safer investments during uncertain economic times.
Increasing gold prices may signal larger economic problems that could impact consumer spending, investment choices, and financial stability.
To navigate these changing market conditions, people should think about diversifying their investments and staying updated on economic trends for better financial decisions.

A recent survey by Lear Capital, a company that sells precious metals like gold, shows that many investors are worried about the rising cost of living. The survey was conducted from April 13 to 15, 2025, during a time when the stock market has been unstable due to new economic policies from the government.

Here are the main concerns from the survey:

66.8% are worried about the cost of living.
50.4% are concerned about the national debt and interest payments.
48.2% fear stock market ups and downs and a possible recession.
26% are affected by tariffs (taxes on imports).
21.7% worry about cybersecurity and artificial intelligence.

Because of the uncertainty in traditional investments like stocks and bonds, and with living costs rising, many investors are looking at alternatives like gold and other precious metals to protect their money and continue making profits. Most investors are holding onto their assets, while some have already sold.

Some investors believe that gold may not be the safest option right now. As more people buy gold because of market uncertainty, its price is going up. As of April 23, 2025, gold costs $3,337.01 per ounce. Lear Capital thinks it could rise to $4,200, while Goldman Sachs predicts it might reach $4,500 by the end of 2025. JP Morgan expects the price to go over $4,000 in the second quarter of 2026.

Despite these worries, most investors are choosing to stay invested and wait for the market to settle down.

Why Is Gold Price A Concern

Gold prices usually go up during times of economic uncertainty, reflecting how worried investors are. Recently, factors like high tariffs, political tensions, and global conflicts have caused gold prices to rise, with spot gold reaching over $3,300 per ounce—a 28% increase this year.

This increase is driven by:

Safe-Haven Demand: Gold is seen as a safe investment. Investors believe its price is stable and can be sold with minimal losses, even during economic troubles. Because of this, many turn to gold to protect themselves from market ups and downs and currency value drops.
Inflation Hedge: Gold is often viewed as a way to protect against inflation. While its price can rise when demand increases during inflation, it is generally seen as a stable asset.
Central Bank Purchases: Central banks around the world are buying more gold, which increases demand and supports higher prices.

While gold can be a protective investment, its price can be unpredictable, and it doesn’t generate income like stocks or bonds do, making it a complicated choice for investors.

How Does This Affect Everyday Americans In The Short Run

In the short term, rising gold prices can indirectly affect everyday Americans. If more investors shift their money into gold, there may be less investment in stocks, which could hurt stock market performance and retirement accounts. High gold prices can also create a sense of economic uncertainty, which may lower consumer confidence and affect spending habits.

However, gold prices themselves do not directly cause increases in the cost of living. Inflation and rising living costs are influenced by many factors, such as supply chain issues, job market conditions, and government policies. So, everyday Americans shouldn’t worry too much about gold prices unless they’re planning to invest.

How Does This Affect Everyday Americans In The Long Run

If gold prices stay high for a long time, it may indicate deeper economic problems like ongoing inflation, global tensions, or the risk of a recession. While rising gold prices do not directly hurt the average person’s finances, they often reflect larger economic issues that can impact everyone. Here are some potential long-term effects:

Reduced Consumer Spending: Ongoing economic uncertainty often leads consumers to be more cautious, reducing spending and slowing overall economic growth.
Shifts in Investment Behavior: A strong move toward gold may divert investment away from stocks and business ventures, potentially limiting capital for innovation and job creation.
Increased Market Volatility: Overreliance on gold can add instability to financial markets, especially if it’s used as a hedge against uncertain policy decisions or currency fluctuations.

While gold can play an important role in a diversified investment strategy, it carries its own risks—such as price volatility and the fact that it doesn’t generate income like dividends or interest.

With both traditional investments like stocks and bonds experiencing instability, and gold prices also fluctuating, investors—whether individual or institutional—may consider diversifying internationally to manage risk and seek better returns.

For everyday Americans, gold should primarily be viewed as an economic signal rather than a direct financial tool. Its price movements can reflect broader trends and uncertainties, offering clues about when it might be wise to adjust investment strategies—but shouldn’t be the sole factor in making personal financial decisions.

Key Points

Investor Concerns: A significant number of investors are worried about the rising cost of living, national debt, stock market volatility, tariffs, and cybersecurity issues, which are influencing their financial decisions.
Gold as a Safe Investment: Many investors are turning to gold and other precious metals as a safer alternative to traditional investments like stocks and bonds, especially during times of economic uncertainty. Gold is viewed as a stable asset that can protect against market fluctuations and inflation.
Rising Gold Prices: As of April 23, 2025, gold prices have increased significantly, reaching $3,337.01 per ounce. Predictions suggest that prices could rise further, with estimates ranging from $4,200 to $4,500 by the end of 2025.
Impact on Consumer Behavior: Rising gold prices can lead to reduced consumer spending and lower confidence in the economy. If investors shift their focus to gold, it may result in less investment in stocks, potentially harming the stock market and retirement accounts.
Long-Term Economic Signals: Sustained high gold prices may indicate deeper economic issues, such as ongoing inflation or recession risks. While gold can be part of a diversified investment strategy, it carries risks and should be viewed as an economic signal rather than the sole factor in financial decision-making.

Sources

about the author

Robert Segrest

Rob is a medical professional and blogger. Having been at the bottom and broke with all the time in the world then going to college and accumulating a ton of debt and making $250,000/yr. He's paid off almost $100,000 in loans and credit card debt to now leaving the daily grind behind and getting back the most valuable asset...time!!

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