Given the ongoing events in the Middle East, Ireland may soon find itself in an inflationary environment worse than that in the aftermath of the Covid lockdowns.
When global energy prices rise, the impact on Ireland is sharper and harder than that felt by our European neighbours. Ireland finds itself particularly exposed to rises in energy costs. As an island economy, Ireland cannot benefit from the continental European rail freight network that allows larger economies to absorb supply shocks more efficiently. Against that backdrop, it is little surprise that investor interest in gold has intensified.
While gold has a track record as a safe haven asset that stretches back for centuries, gold has endured a sharp pullback in recent weeks. While gold reached an all time high of more than $5,600 in January – it has now pulled back more than 16%. This phenomenon is well documented – gold also dropped sharply in the initial aftermath of the collapse of Lehman Brothers, and again in March 2020. In both cases gold performed well in the ensuing years. The yellow metal’s falling price can be attributed to large banks and hedge funds liquidating their gold positions in order to meet margin calls on other assets. Gold is a liquid asset with near 24 hour availability – meaning it is one of the first assets sold when cash is urgently needed.
Aside from the above, a pullback was perhaps a natural result of gold’s bull run throughout late 2024 and all of 2025. In that period the price doubled, meaning at some stage early investors would take profits. Many investors have used this pullback to enter the market or increase existing positions. For Irish savers and investors facing structurally higher energy costs and a cost-of-living squeeze that shows little sign of abating, physical gold continues to represent exactly what it has always represented: a proven store of value that cannot be printed in the same way currency can.
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