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Over the past five years, the gold price has increased by more than 78%. With bars of gold bullion typically weighing about 400 ounces, current gold prices mean that each bar is now worth more than $1 million. Since 2024, these three fundamental factors have driven the gold price rally.

1. Interest rates

Gold typically thrives in low-interest environments, as it becomes more attractive compared to assets that yield returns, like stocks and bonds. Central banks, particularly the Federal Reserve, play a crucial role in this dynamic. When the Fed cuts interest rates to stimulate economic growth, gold gains appeal, as it doesn’t pay interest but holds its value over time. This has been a major driver behind the recent gold rally, as the Fed has started reducing rates, prompting renewed investor interest.

2. Central Bank Purchases 

Central banks, particularly in emerging markets such as China, Russia, India, and Turkey, have significantly increased their gold holdings. This trend is driven by efforts to hedge against global economic uncertainty and to reduce reliance on the US dollar. In 2024, central bank gold purchases exceeded 1,000 tons for the third consecutive year. China’s pilot program allowing insurers to buy gold may further boost demand, potentially adding $27 billion to the market. Gold’s role as a long-term store of value and a crisis hedge has solidified its importance in foreign reserves.

3. Geopolitical Uncertainty

Gold is considered a safe-haven asset during periods of geopolitical instability. Ongoing conflicts, like the war in Ukraine and tensions in the Middle East, combined with unpredictable shifts in global trade, have increased demand for gold. These factors make it a preferred investment as a safeguard against market volatility.

Will Gold Continue To Rally?

While predicting the future is never certain, the outlook for gold remains strong. Market expectations point to further interest rate cuts by the Fed, with inflation softening but still above target. This, coupled with a potential weakening of the US dollar and continued global economic growth, suggests that gold could continue to perform well. Goldman Sachs forecasts gold could surpass $3,000 by the end of 2025, with some analysts predicting even higher prices in the longer term, possibly reaching $4,000.

With so much economic and geopolitical uncertainty around, it’s small wonder many investors believe that now is a good time to invest in gold. If you are looking for investing in gold, be sure to check out our catalog as we sell ready stock physical circulated gold bars with the best condition in the market.