Why Gold’s Rally Still Has Room to Run

Introduction

Gold has a long history as a store of value and is widely regarded as a safe-haven asset, often sought during periods of economic or geopolitical uncertainty. It has also served as a symbol of wealth and status throughout the ages. Owing to its historical significance and liquidity, gold remains a highly tradable asset and is often included as part of a diversified investment portfolio.

Gold’s Bull Market

The current bull run began when gold broke decisively above the $2,000 level in March 2024. Since then, the metal has surged, more than doubling in value. This year has been particularly strong, with gold up over 55% despite a recent pullback. After reaching a record high of $4,381 on 20 October, prices have since eased by about 6%. Given such a steep advance, the correction was hardly unexpected, it was largely technical.

Gold had been in overbought territory since September, and some profit-taking was inevitable. Markets don’t move in straight lines, and this retracement reflects a natural pause in an otherwise powerful uptrend.

Drivers of Gold

Several clear factors have fuelled gold’s uptrend in 2025. Chief among them is continued central bank buying, with many institutions adding to their reserves. At the same time, investors have sought the safety of gold amid renewed trade tensions and tariffs imposed by the Trump administration, which have heightened market uncertainty.

Other factors have also played a role. Concerns over the Federal Reserve’s independence, rising geopolitical tensions and conflict, and the swelling U.S. debt burden have all added to a sense of uncertainty. In turn, this has strengthened demand for safe-haven assets, with gold emerging as a natural beneficiary.

Gold vs the S&P 500

Gold has outperformed the broader S&P 500 since the start of 2025, with its lead widening sharply in April after President Trump declared “Liberation Day” on 2 April. The announcement triggered a steep sell-off in equities that lasted until a three-month reprieve was introduced the following week. Although gold’s outperformance briefly narrowed as the S&P 500 stabilised, the metal resumed its strong run from September onward. Year-to-date, gold has outpaced the broader index by an impressive 37%.

The US Dollar

It’s also worth noting the role of the U.S. dollar. Gold typically moves inversely to the greenback since it is priced in U.S. dollars per troy ounce. When the dollar strengthens, gold becomes more expensive for foreign buyers, dampening demand and vice versa. Beyond the other factors already discussed, the dollar’s weakness in the first half of the year provided an additional boost to gold’s rally. However, since September the greenback has been trending higher, and with gold already in overbought territory, the stronger dollar now appears to be acting as a headwind for the metal.

If the dollar continues to strengthen this is likely to impact on gold’s momentum. However, if the other drivers continue to exert influence, as long as they are stronger than the the greenbacks advance on a relative basis, the precious metal may continue to trend higher.

Central Bank Buying

Central-bank demand has become one of the strongest forces underpinning gold’s record-breaking run. The People’s Bank of China is leading the charge, emblematic of a broader wave of emerging-market central banks steadily adding to their reserves as they diversify away from the U.S. dollar. These persistent inflows have tightened global supply and provided a dependable bid that cushions the market during pullbacks. In 2024 alone, central banks snapped up more than 1,000 tonnes of bullion for the third consecutive year, taking their collective holdings to roughly one-fifth of all the gold ever mined, a formidable backbone for the market.

Unlike hedge funds or retail speculators, central banks buy for strategic reasons, not short-term gain. Their long-term accumulation lends stability and credibility to the rally. China’s ambitions to act as a custodian for foreign sovereign gold reserves could further deepen liquidity in Asia and extend its influence over global pricing. Together, these forces make official sector buying one of the most durable supports for gold’s valuation, even as global conditions ebb and flow.

The rush into gold also has roots in geopolitics. The pace of central bank buying accelerated after Russia’s invasion of Ukraine, when the U.S. and its allies froze Moscow’s reserves. That episode exposed just how vulnerable currency assets can be to sanctions, and underscored gold’s appeal as an untouchable store of value. For many policymakers, bullion has become both a symbol of sovereignty and the ultimate financial insurance policy.

Technical Analysis - The Primary Trend

The primary trend of gold is up. It is characterised by a series of higher troughs followed by higher peaks. The primary trend tends to reflect underlying fundamentals. Until this trend is reversed by a lower peak followed by a lower trough on a longer-term chart, it will be difficult to make a convincing case that gold is turning lower. More cohesive arguments point either to the trend continuing or to a period of consolidation.

Given this backdrop, pullbacks in the gold price are, in fact, enticing, they offer opportunities to enter a robust, well-supported uptrend at more attractive levels. With official-sector demand providing a firm foundation and macro uncertainty maintaining investor interest, dips are likely to be viewed less as warning signs and more as pauses within a broader, enduring bull market.

Conclusion

Gold’s ascent is being driven by a convergence of powerful forces - structural, geopolitical, and technical. Persistent central-bank accumulation, a volatile macroeconomic backdrop, and concerns over currency stability have all created a durable foundation beneath the market. While temporary pullbacks are inevitable, the underlying bid from official buyers and investors seeking safety continues to reinforce the metal’s upward trajectory.

Unless the long-term trend of higher highs and higher lows is decisively broken, the broader narrative remains one of strength. Gold is no longer merely a hedge against uncertainty; it has reasserted itself as a strategic asset in a shifting global order, one shaped by debt, trade wars and de-dollarization. For now, the message from the market is clear: every correction in gold is less a warning of weakness, and more an invitation to participate in one of the most resilient bull markets of this decade.