After rising by around 28% in US dollar terms in 2024, gold has gained over 50% year to date, despite a temporary correction in October. As a result, 2025 ranks among the four best years since the end of the gold standard in 1971 and marks one of the most pronounced rallies of the precious metal in the modern monetary system.
Until the early 1970s, the gold price was officially fixed: one troy ounce cost 35 US dollars, and many currencies were pegged to gold. On August 15, 1971, US President Richard Nixon ended this peg because the growing dollar reserves could no longer be backed by gold. Ever since this “Nixon Shock,” the gold price has been determined freely by the market – fluctuating according to inflation, interest rates, crises, and investor confidence.
Today, real interest rates (interest rates minus inflation) and the US dollar are the main factors moving the gold price. Declining real interest rates or a weaker dollar typically increase demand for gold, as it becomes more attractive relative to interest-bearing investments and more affordable globally. Conversely, rising interest rates or a stronger dollar tend to put pressure on the price. As such, gold reflects the interplay between the economy, monetary policy, and global confidence.
The main drivers of this development are ongoing geopolitical tensions, strong demand from institutional investors, and the expectation of further declines in real interest rates. Since 2022, central banks in particular have increased their physical gold holdings to diversify their currency reserves and hedge against rising government debt and growing fiscal deficits in the US. In addition, doubts about the risk-free nature of US Treasuries and the increasing fragmentation of the world order have further strengthened the appeal of gold as a strategic reserve and hedging instrument.
In parallel, gold ETFs have seen significant capital inflows since 2024. This highlights the fact that both institutional and private investors are increasingly turning to the precious metal. Key factors include expectations of falling interest rates following the US Fed’s shift in monetary policy, as well as a heightened need for protection against growing macroeconomic risks.
At the end of October, gold was subject to a sharp correction after an exceptional rally to around USD 4,400 per ounce. Since then, the price has stabilized and is now fluctuating around the USD 4,000 mark. This pullback was largely triggered by profit-taking and represents a natural, technical consolidation following a sharp rise. Such volatility after a strong upward movement is typical for the market and should not come as a surprise to investors. The key question now is whether the rally will continue next year or if 2026 will see the emergence of a new phase with a different dynamic.
Note: In traditional technical analysis, the 200-day moving average is considered a key long-term trend line. It smooths the average price of the last 200 trading days, acting as a technical support or resistance. A gold price that is clearly above this line for a sustained period signals a strong uptrend and heightened buying activity. In October, the difference between the gold price and the 200-day moving average was above 25%, however, suggesting technical overheating and an overbought state. This led to a short-term correction triggered by profit-taking.
From our point of view, several factors suggest that gold will retain its strategic role in a portfolio context next year. The weakening global economy, declining interest rates, and ongoing geopolitical tensions are pushing investors into stable stores of value again.
Our assessment is backed by data from the World Gold Council: Ongoing buying pressure from central banks remains a key driver of the market. Almost all central banks surveyed by the World Gold Council expect gold reserves to increase, and a significant number plans to buy more gold – particularly in emerging markets increasingly seeking to diversify away from the US dollar.
This reinforces a structural trend: gold is increasingly seen not as a short-term crisis trade, but as a strategic counterbalance to government bonds and currencies.
However, investors should keep in mind that gold can also suffer significant setbacks during periods of market stress – for example when investors take profits or need to cover liquidity needs, as happened in October.
Technical analysis identifies the area around USD 4,000 as an important psychological support, which could be crucial for further price development. Short-term setbacks do little to change the overall positive outlook.
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The rapid development of artificial intelligence (AI) influences global financial like markets unlike any other mega trend these days. AI drives innovation, investments, and expectations, accelerating not only stock prices of technology giants, but increasingly earnings expectations for the broad equity markets. Many companies are fueled by expectations that AI will improve their productivity, margins, and long-term growth opportunities.
The financial market keeps climbing, driven higher not only by fundamentals but by faith in technology, in policy pragmatism by central banks and governments, and in the idea that the easiest path remains the right one. Still, it may be prudent to pause and look around. Staying invested remains key and prudent advice but so is reassessing portfolio structure. Diversifying beyond the AI theme may prove the wiser route, not out of skepticism toward AI, but to ensure balance and resilience.