Insights 
VT 
The year 2025 is shaping up to be nothing short of historic for gold.
Since the onset of the COVID-19 pandemic in early 2020, the yellow metal has enjoyed a spectacular rally; rising from approximately $1,575 per ounce in January 2020 to surpassing $3,500 per ounce by mid-2025.
Long valued as a symbol of wealth and a store of value, gold is once again asserting its dominance on the global stage, propelled by a complex interplay of economic anxiety, geopolitical instability, and monetary policy shifts.
2024: A Record-Breaking Prelude
The previous year, 2024, marked a turning point. Gold prices soared by 27%; their largest annual gain since 2010. This has set all-time highs on 40 separate occasions. It was an unprecedented run, driven by a confluence of macroeconomic events, including aggressive rate cuts, record-breaking central bank gold purchases, and global de-dollarisation efforts.
We see that this upward momentum hasn’t just continued in 2025. If anything, it has accelerated.
2025: Breaking Expectations
So far in 2025, gold has defied every forecast of a major pullback. Despite frequent warnings of a looming “price correction” or a speculative bubble, the precious metal has instead reached fresh highs month after month. Each rally has sparked renewed debate: is this sustainable growth, or a bubble waiting to burst?
For now, the evidence points to the former. Temporary price dips have been shallow and short-lived, typically coinciding with brief periods of geopolitical calm or minor recoveries in global economic indicators. These pauses are widely seen as healthy market corrections within an otherwise strong upward trend.
What’s Driving the Surge?
Several key factors continue to fuel gold’s ascent:
1. US Interest Rates
Historically, gold moves inversely to interest rates. As the Federal Reserve shifts toward rate cuts in response to slowing growth, lower yields on traditional safe-haven assets like government bonds make gold more attractive.
With real interest rates slipping back into negative territory in 2025, investors are flocking to gold as an inflation hedge.
2. Persistent Inflation
Global inflation remains stubbornly high, especially in the US and Europe. Gold has long been viewed as a traditional hedge against inflation, preserving purchasing power even as fiat currencies weaken.
With consumer prices climbing and monetary policies remaining loose, the appetite for gold remains strong.
3. Geopolitical Instability
Ongoing conflicts, including the prolonged Russia–Ukraine war and rising tensions in the Taiwan Strait, continue to inject uncertainty into the global economy.
This climate of instability enhances gold’s appeal as a safe-haven asset, especially during market sell-offs or crises.
4. Central Bank Demand
One of the most significant drivers has been aggressive gold accumulation by central banks. In particular, China, India, and Russia have sharply increased their gold reserves in a broader strategy to diversify away from the US dollar. This is often referred to as “smart hedging.”
According to the World Gold Council, central bank purchases reached record levels in 2024 and have continued at a strong pace in 2025.
5. US Political Risk & Trade Wars
The re-election of Donald Trump in November 2024 and his inauguration in January 2025 reignited global trade tensions.
Trump’s administration swiftly reintroduced punitive tariffs. This is not just on China, but across a range of US trading partners.
In response, China announced new tariffs on US imports, escalating trade hostilities. These events have increased fears of a global slowdown and pushed investors toward gold.
6. US Federal Debt Crisis
A lesser-discussed but increasingly potent force behind gold’s rally is the ballooning US national debt, which has now exceeded $36 trillion.
As concerns mount over long-term fiscal sustainability and potential currency debasement, investors are hedging by moving into hard assets.
Some analysts now argue that the era of gold under $2,000 per ounce is firmly over, and the next psychological target is $4,000 or even $4,200.
What’s Next for Gold?
With monetary easing, geopolitical tension, and sovereign debt concerns showing no signs of abating, many analysts believe gold’s bull run still has legs.
If central banks continue buying at current levels, and fiscal pressures in the US intensify, the market could see new record highs, possibly exceeding $4,200/oz by year-end.
As with all markets, nothing is guaranteed. But for now, gold is not just glittering—it’s roaring.
