Gold prices have more than doubled since their low in October 2023, reaching a peak of $4,381 per troy ounce on 20 October this year – impressive for an asset with no yield!
With numerous catalysts fuelling the recent gains, warning signals of investor overexuberance and market volatility spikes have led to a predictable pause. However, underlying technical support for the precious metal remains intact, and we expect a continued rise in gold prices over the long term.
During the last two years, gold price gains were so strong that any drop was quickly followed by buying. However, gold has experienced similar surges that pushed its price to well above its 200-day moving average, such as after the subprime crisis from 2009 to 2011. That period saw major changes in the monetary policy of the main central banks with the introduction of quantitative easing.
Recent catalysts for the surge
The latest rise in precious metals since August 2025 has been fuelled by several catalysts originating from emerging markets and the US.
- For example, in China, the authorities approved (for the first time) a pilot programme allowing 10 insurers to invest up to 5% of their assets in gold.
- Also, for the first time, the Saudi Central Bank, which plays a central role among oil-exporting countries, gained exposure to silver.
- And in India, pension fund managers pressured the local regulator to allow investments in gold and silver exchange-traded funds (ETFs).
In the US, the Department of the Interior considered adding silver to the 2025 draft list of critical minerals, defined as those being “essential to the economic or national security of the United States and whose supply chain is vulnerable to disruptions”. With national security becoming a priority, stockpiling would have been encouraged, as well as export restrictions.
Technical warning signals
Nevertheless, since October 2025, warning signals have been accumulating. To begin with, on 17 October, gold had recorded nine consecutive weeks of gains – a run which, while rare, has historically preceded corrections. In 1980, 1983, 2006, and 2020, similar rallies were systematically followed by an average drop of 17% over three months.
Furthermore, that same week, investor sentiment became euphoric, and the implied volatility of gold, as measured by the GVZ index, reached a high. It was a scenario that revealed speculative investor enthusiasm for leveraged instruments such as derivatives (options). And again, historically, a major simultaneous rise in prices and volatility has preceded a correction.
Given the speed and magnitude of the rise in precious metals over the past two years, a pause was predictable, and the factors described above likely accentuated the decline.
Long-term support still present
Nevertheless, the fundamental, macroeconomic and geopolitical forces supporting gold are both clear and present. Many of these forces have even grown in importance over time:
- Geopolitical: The transition to a multipolar world order involving China and the US as evidenced by the expansion of the BRICS1 and the growing appetite for gold of emerging market central banks
- Fundamental: Gold is a real asset that serves as a ‘safe haven’ due to its scarcity, appreciating in times of crisis. Gold also acts as a ‘reserve value,’ protecting against inflation
- Macroeconomic: Gold is inversely correlated to real interest rates due to its ‘carrying cost.’
Questioning the US dollar as a reserve currency
However, gold’s appreciation is not only the result of an imbalance between supply and demand. It could also be seen as a challenge to American leadership and, more specifically, to the dollar as the world’s primary reserve currency.
Indeed, for the first time since 1996, central bank gold reserves now exceed those in US Treasuries, and the dollar’s share in reserves has continued to decline.
In a paper “The international role of the euro” published in June 2025, the European Central Bank noted that, due to the combined effect of these purchases and rising prices, gold has replaced the euro as the second most held reserve asset on central bank balance sheets.
Ultimately, it is not only the independence of the US Federal Reserve that is under question but also, to some extent, confidence in the US itself.
Conclusion
Given these factors, we anticipate a continued rise in gold over the long term and expect the recent peak at $4,381 to be surpassed.
Consequently, we consider the levels seen at the start of November as an investment opportunity. From 24 October 2008 to 5 September 2011, gold prices rose by more than 180%.
We are not there yet, and we should remember that central banks – which do not have to work with benchmarks and financial management rules (money management) – are not sensitive to prices.
[1] Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, South Africa and the United Arab Emirates
