Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

Date: April 29, 2025

In times of global financial uncertainty, one asset has consistently captured investor attention: gold. 

From economic crises to geopolitical shocks, gold is often seen as a beacon of stability. 

But how does it really behave during market turmoil, and why is this relevant for Muslim investors seeking halal financial strategies?

This article explores:
1. current market trends
2. pros of gold
3. cons of gold
4. how it compares to other defensive assets
5. how gold has historically performed during crises
6. Key takeaways for Muslim investors

1. Gold as a Safe Haven: What Does It Mean?

Gold’s recent surge past $3,500 per ounce in April 2025 marked a historic milestone, driven by rising investor anxiety over inflation, currency volatility, and political uncertainty. According to the Financial Times, the metal’s climb to $3,500 followed escalating tensions between President Trump and Federal Reserve Chair Jay Powell, which raised fears over central bank independence and monetary stability.

The Wall Street Journal and Guardian both reported that this surge in gold reflected a broader flight from dollar-based assets into tangible stores of value. In short, when confidence in major financial systems falters, gold often reasserts its traditional status as a safe haven.

2. What Makes Gold Tick?

For Muslim investors, understanding what drives gold’s performance is as essential as its Shariah compliance.

Several factors influence gold’s behavior:

• Investor Sentiment: Fear-driven buying often drives demand.
• Inflation Expectations: Gold tends to rise when inflation fears grow, as it maintains purchasing power.
• Interest Rates: When real interest rates (after inflation) are low or negative, gold becomes more attractive.
• Currency Movements: Since gold is priced in USD, a weaker dollar can boost gold prices for international investors.

3. A Halal Perspective: Is Gold Permissible in Islam?

From a Shariah perspective, gold is generally considered halal when held in physical form or through investment vehicles backed by actual gold reserves.

Islamic finance principles prohibit speculation (gharar) and interest (riba), so gold futures and margin trading would not be permissible. Instead, Muslim investors often prefer:

• Physical gold: Coins, bars, or wafers held in personal or secure storage
• Gold-backed ETFs: Funds that own and store gold on behalf of investors

A notable development in this space is The Royal Mint’s Shariah-compliant gold offering. Endorsed by Amanie Advisors and compliant with the AAOIFI Shariah Standard on Gold, The Royal Mint now allows retail investors to buy, store, and sell gold bullion in a fully halal framework. This includes coins and bars, which can be stored in The Royal Mint’s Vault® – a highly secure facility approved for Shariah-compliant gold holdings.

The AAOIFI standard, developed in cooperation with the World Gold Council, ensures that compliant gold investments are based on physical ownership, transparency, and real delivery. This marks a significant step for Muslim investors looking for trusted, accessible, and verified halal gold products.

4. Historical Performance: Gold Through the Ages

Gold’s value has risen sharply in past crises, and the current cycle has been no different. Here’s a quick reference chart showing how gold has performed during key economic events:

Despite these patterns, gold is not always smooth sailing. It can still experience short-term declines as investors sell assets during liquidity crunches.

5. How Does Gold Compare to Other Defensive Assets?

Gold is one of several tools used to cushion market shocks. For halal-conscious investors, here’s how it stacks up:

Sukuk (Islamic bonds): 

These Shariah-compliant bonds offer predictable, asset-backed income. While considered lower risk, their value can still be influenced by interest rate movements and market liquidity.

Low-Volatility Stocks: 

Typically found in stable sectors like utilities and consumer goods, these stocks aim to reduce market swings. However, they still carry equity risk and may underperform during broad rallies.

What makes gold distinct is its historically low correlation with both stocks and bonds. That means it often moves independently, providing valuable diversification, particularly in times of economic instability.

6. Key Takeaways for Muslim Investors

• Diversification – Gold adds balance to a portfolio, especially during downturns
• Accessibility –  Available through physical formats or compliant ETFs
• Compliance – Halal if structured properly – avoid speculative products
• Limitations – No income generation, and prices can be volatile short-term

Gold is not a cure-all, but it has stood the test of time as a strategic asset in troubled times. For Muslim investors aiming to preserve wealth without compromising ethical principles, understanding gold’s role is an important step toward building a resilient halal portfolio.

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