Gold’s rally has gone from strength to strength

Key Takeaways

Gold’s rally has been super-robust, but we wait to see if a broad based sell-off, prompted by the trade wars, leads to a more meaningful pullback in gold prices
Given that all the bullish factors that have driven gold prices higher are unlikely to go away any time soon, any sell-off in price is likely to be short-lived, even if it is steep
Geopolitical risks remain in force; indeed, they have escalated as China has stepped up drills around Taiwan, and China will need to retaliate against Trump’s punitive tariffs
Silver is well placed to outperform gold, but is failing to do so. The gold/silver ratio has climbed to 1:96...
...subdued industrial demand, which is likely to suffer more in this trade war environment is one reason why silver is underperforming, and the absence of central bank interest in silver is another
PGM demand also threatens to be damaged by the US tariffs, especially as auto imports have had some of the highest tariffs imposed on them
PGM supply deficits are helping to rebalance the markets, but inventories are high

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Gold’s rally has gone from strength to strength, and is being driven by multiple factors, it looks robust. However, the escalation in trade wars could trigger a broad-based sell-off across markets, which could take gold with it, at least initially.

Any sell-off is likely to be seen as a buying opportunity given that many of the bullish factors behind the gold rally are unlikely to go away any time soon
Tariffs are also likely to be inflationary, or worse still, cause stagflation, which could boost demand for safe havens
The weaker US dollar and US Treasury yields are also supportive factors for gold
Central banks and ETF investors continue to show interest in gold, even if some fund selling has started to emerge
Geopolitical risks remain elevated, the bombing of Gaza has restarted, China has held large-scale military drills around Taiwan and Russia is not accepting the US peace plan for Ukraine

Silver put in a strong performance, but still underperforms gold, and industrial demand is likely to be hurt by the trade wars.

There is a lot of bullish talk about the outlook for silver, but the gold/silver ratio at 1:96 highlights that the silver train has not left the station yet.

PGM prices struggle to hold above $1,000 per oz, and with industrial demand likely to be hurt by trade wars, the outlook remains subdued.

Low PGM prices increase the risk of production cuts. Any such cuts would increase the supply deficits and speed up the draw down of stocks.

No stopping gold, as the world seems more unstable than it has for a long time.

Gold’s ascent is fueled by geopolitical tensions, economic uncertainty, and growing global debt, with the rally approaching historic highs.

Gold prices set another series of record highs in March, as the world appears increasingly unstable on geopolitical, economic, climate, and humanitarian fronts — to name the most pressing. Gold’s latest record high was just shy of $3,149 per ounce, set on 1st April. This means prices have already climbed 20% since the end of 2024 and are up 95% from the triple lows around $1,615 per ounce seen between September and October 2022.

What can past major rallies tell us?

So, how does the latest rally compare with previous mega rallies? The biggest this century was the 2001–2011 rally, which ran from $253 per ounce to $1,921 per ounce — a gain of 657%. It had its origins in the aftermath of the dot-com bubble, and was further spurred by the 9/11 terrorist attacks and the move towards ultra-loose monetary policy that followed. It was then fueled by the commodity super-cycle, and later by the response to the Global Financial Crisis (GFC) and the European debt crisis.

Major gold rallies this century
Rally	$ gain	% gain
2001-2011	$1,668	657%
2018-2020	$914	79%
2022-2025	$1,534	95%

The 2018–2020 rally, which saw gold rise from $1,160 to $2,074 per ounce, was driven by concerns over the US–China trade war, tensions in the Middle East with the US–Iran confrontation, Brexit, and strong central bank buying. The current rally is driven by various factors, many of which are similar to those previously mentioned. However, it is particularly influenced by the increase in geopolitical tensions, concerns about the uncertainty and unpredictability of President Donald Trump’s policies, the massive levels of global debt, and the growing interest among BRIC nations in moving away from reliance on the US dollar and US Treasuries.

CHART 1

In dollar terms, this rally is approaching the gains seen during the 2001–2011 rally — although it has achieved this in just a fifth of the time. On a percentage basis, however, this rally could have significantly further to run — but can that be justified? Perhaps it could, if we are witnessing the emergence of a new world order — one where the US dollar’s status as the world’s reserve currency may start to diminish. Either way, the strength and resilience of the current rally suggest that something unusual is unfolding.

CHART 2

Central Bank buying continues

Central banks reportedly purchased a net 18 tonnes of gold in January, with emerging market countries being the most active — including Uzbekistan (8t), China (5t), and Kazakhstan (4t). Poland and India each bought three tonnes, the Czech Republic acquired two tonnes, and Qatar added one tonne. The main sellers were Russia (-3t), Jordan (-3t), and Kyrgyzstan (-2t). China also purchased a further five tonnes in February. In total, central banks bought a net 1,045 tonnes in 2024, marking the third consecutive year in which purchases have exceeded 1,000 tonnes.

CHART 3

09 Apr 2025 | Categories: Gold, Silver, China, Dollar, US, Platinum, Palladium, UK, Euro, Brexit, Politics

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Gold’s rally has gone from strength to strength

Key Takeaways