If you feel like everyone is talking about gold again, you are not imagining it. Prices have pushed to fresh records after breaking above the 2020 and 2024 peaks, putting the metal squarely back in the spotlight for savers and investors. What makes this rally stand out is that it arrived even while real interest rates were relatively high until recently and while many Western exchange-traded funds struggled to attract steady inflows. The short version is simple. A powerful mix of easier policy expectations, a softer dollar at key moments, and a structural shift in demand toward central banks and Asian households has changed the market’s center of gravity.
Macro drivers: rates, dollar and inflation
Gold tends to rise when inflation-adjusted yields fall because the opportunity cost of holding a metal that pays no income goes down. As investors price in rate cuts from the Federal Reserve and other major central banks, bond markets transmit those expectations into lower real yields, which supports gold. Diverging policy paths matter as well. The European Central Bank has already taken steps to ease while the Fed signals a gradual approach, and several emerging-market central banks began cutting earlier. Those rate differentials ripple through currencies and global liquidity, shaping gold pricing day to day.
The U.S. dollar is the other key macro lever. When the dollar softens, commodities often get a tailwind because they become cheaper for non‑dollar buyers. Dollar moves have been tied to shifting rate expectations, risk appetite and growing fiscal concerns. The United States is running large deficits that are above 6 percent of GDP, a backdrop that can weigh on the currency at times and add to gold’s appeal. Inflation uncertainty lingers too. Services prices remain sticky in many economies, and that persistence keeps hedging demand alive even as headline inflation moderates.
Demand is different this time
The biggest story on the demand side has been official-sector buying. Central banks have diversified reserves away from the dollar in recent years for reasons that include sanction risk, geopolitical hedging and portfolio construction. According to industry data, net central-bank purchases exceeded 1,000 tonnes in both 2022 and 2023, and remained elevated in 2024. This buying tends to be less sensitive to price swings than retail or ETF flows, which helps create a demand floor and dampens the market’s reaction to negative surprises.
Asia has also taken the baton. In China, households have redirected savings toward bars, coins and jewelry as property and local equities struggled and as capital controls limited outbound options. Shanghai prices frequently trade at a premium to global benchmarks, at times by tens of dollars per ounce, a sign of tight local availability. India’s demand remains anchored in weddings and festivals, with purchasing power influenced by monsoons and the rupee. Import policies and local taxes shape timing, but the cultural bid is resilient. Together, these regional flows have offset inconsistent interest from Western investment vehicles.
Futures positioning adds another layer. Net long interest in gold futures rises when momentum accelerates, and rules-based strategies can amplify sharp moves. Retail access has also broadened through online brokers, vaulted accounts and fractional buying, pulling in investors who want exposure without taking delivery.
Supply is slow to respond
Mine supply growth has been flat to slow. Many producers face declining grades, longer permitting timelines and higher input costs. Recycling helps during price spikes as households sell old jewelry, but it rarely offsets prolonged deficits on its own. Miners have been disciplined after the last boom, prioritizing balance sheets over aggressive expansion. That restraint limits long-term supply elasticity and supports a tighter market when demand surges.
Safe-haven bid and market plumbing
Geopolitical risk continues to lift the insurance value of gold. Conflicts in Eastern Europe and the Middle East, and tensions elsewhere in Asia, have raised risk premia across assets. Trade fragmentation and sanctions encourage reserve diversification and cross-border hedging. In that environment, gold’s role as a portfolio stabilizer is hard to replicate.
Under the hood, prices are shaped by the interplay of London’s over-the-counter spot market, COMEX futures in New York and regional hubs such as Shanghai. Arbitrage links these venues, transmitting shocks quickly. The futures curve is often in mild contango, which reflects funding and storage costs, and it can tighten when physical demand is strong. Liquidity clusters around macro data and policy meetings, which is why volatility often jumps near central-bank announcements.
How to think about value and portfolios
Investors often frame gold’s “fair” level around real yields, dollar strength, money supply growth and the cost of hedging tail risks. Compared with the global financial crisis and the early pandemic, today’s run shares the themes of easing policy and uncertainty, but it differs in scale and drivers of official and Asian demand. As for the inflation hedge debate, gold has not always tracked near-term inflation prints, yet over longer horizons it has historically preserved purchasing power.
Exposure can come through physical bullion, allocated or unallocated accounts, ETFs that hold metal, mining equities, royalty and streaming companies, and derivatives. Each path carries trade-offs for tracking, fees and operational risk. Miners can offer torque to the gold price but also move with broader equities, so they behave differently from bullion. Across regimes, a modest allocation to gold has shown low correlation with stocks and bonds, which can improve diversification.
Risks, scenarios and what to watch
Upside risks include faster policy easing, renewed dollar weakness, worsening geopolitics or another wave of official-sector buying. Downside risks center on a rebound in real yields, a stronger dollar, tighter-than-expected policy or a pause in central-bank demand. Crowded speculative longs can also leave the market vulnerable to quick pullbacks, and domestic policy shifts, such as import restrictions or taxes, can cool local buying.
A base case points to gradual developed-market easing, moderate disinflation and steady central-bank purchases, with prices holding a higher range. A bull case would add persistent geopolitical stress and a weaker dollar, pushing new highs. A bear case would feature higher-for-longer real yields and softer official buying, which could force a retracement.
Watch the Fed’s guidance on the pace of rate cuts, moves in real yields and TIPS breakevens, reserve disclosures from central banks and import data from China and India. An inflection toward net inflows in Western ETFs would signal broader participation. Also track miners’ capital plans and recycling volumes, along with volatility around major geopolitical events.
In sum, gold’s strength reflects a structural shift in who buys it and why. Official-sector and Asian demand is now the anchor, layered on top of easing real yields and persistent geopolitical risk. That mix argues for a durable role in diversified portfolios, even if the path is bumpy and still hinges on real rates, the dollar and the behavior of central banks.