Gold reached a new all-time high of $3,000 per ounce today, March 14, 2025, surpassing its previous peaks of $2,800 per ounce on October 30, 2024, and $2,963 per ounce on February 24, 2025. This marks a significant increase, reflecting shifts in investor sentiment, economic uncertainty, and changes in supply and demand. In this article, we examine gold demand and its performance from 2020 (when we predicted a significant price jump - Link of 2020 blog post about gold) to now, analyzing key trends in consumption and recent factors influencing gold prices.
Why is Gold special？
Gold has long been regarded as a safe-haven asset; it tends to retain or increase in value during times of economic uncertainty, financial market turmoil, or geopolitical instability. This status is primarily driven by gold’s intrinsic value, limited supply, and historical role as a store of wealth. Unlike fiat currencies, which can be devalued due to inflation or monetary policy decisions, gold is not directly tied to any government or central bank. Additionally, its low correlation with traditional assets such as stocks and bonds makes it an attractive option for portfolio diversification.
Several factors typically drive gold price movements, both upward and downward. Gold prices tend to rise during periods of economic instability, high inflation, or geopolitical risks, as investors seek protection from market volatility and potential currency devaluation. For example, during the 2008 financial crisis, gold prices soared as investors moved away from riskier assets. Similarly, gold spiked in 2020 amid the COVID-19 pandemic and the associated economic uncertainty. On the other hand, gold prices can decline when the global economy stabilizes, interest rates rise, or the U.S. dollar strengthens. Higher interest rates increase the opportunity cost of holding non-yielding assets like gold, making fixed-income securities more attractive in comparison.
Gold in 2022
During the first nine months of 2022, gold demand rose by 18% to 4,741 tons compared to the same timeframe in 2021, reaching the highest level in 11 years as reported by the World Gold Council. The war in Ukraine which started in February 2022 did help increase the demand for gold as the prospect of a wider war increased. The total demand for the full 12-months of 2022 was 4,751.9 tons. This surge in demand resulted from substantial central bank acquisitions.
In 2022 and 2023, central banks purchased 1,082 and 1,037 tons of gold, respectively, marking the second- and third-highest levels of net purchases on record since 1950 and the 14th consecutive year of net central bank gold acquisitions. Reported buyers included Turkey, India, and Uzbekistan, while unreported purchases were suspected from central banks such as those of China and Russia. In response to U.S. sanctions on Russia and concerns over dollar exposure, some countries are likely diversifying their global reserves to mitigate the potential impact of future sanctions. Analysts expected a slowdown in 2024, but it never came. Instead, central banks continued buying at unexpectedly high levels for the third year in a row, underscoring gold’s lasting role in global finance.
Analysts speculated that China is accumulating gold to reduce its dependence on the U.S. dollar. After a pause in 2019, the People's Bank of China resumed gold purchases, acquiring 62 tons in November and December 2022, which pushed its gold reserves above 2,000 tons for the first time. The Chinese central bank continued its acquisitions throughout 2023, reaching an estimated 2,240 tons at the start of 2024. According to the World Gold Council, China’s gold reserves further increased to 2,279.56 tons in 2024, reinforcing its commitment to diversifying its reserves away from the U.S. dollar.
The World Gold Council speculated that central banks in general are buying gold because of its stability during crises and its role as a long-term store of value. This rationality could explain why investment demand for gold in 2022 increased by 12% year-on-year, with global investors buying 1,113 tons of gold bars and coins. Western investors demonstrated a strong interest in gold in response to high inflation, the war in Ukraine, and the Israel-Gaza conflict. In 2022 the combined US and European gold bar and coin purchases reached an annual record of 427 tons, surpassing the previous 2011 record of 416 tons.
Gold in 2023
The 2022 upward trend for the demand for gold continued in 2023 as the price of the commodity rallied in recent months, breaking the $2,000 per ounce barrier for the first time since 2020, in March 2023. Total demand for gold reached 4,898.8 tons in 2023, a 3.1% increase over demand in 2022 (World Gold Council).
In the second of 2023, gold prices started to trend lower as inflation abated which resulted in lower fixed income yields and a weaker dollar. However, with the start of the Israel-Gaza war, there has been more safe-haven buying of gold in the OTC physical gold market and major exchanges. Gold trading volume surged by 24% towards the end of 2023.
Gold in 2024
Gold saw a sharp rally in 2024, driven by a combination of geopolitical tensions, monetary policy shifts, and increased institutional interest. By October 30, 2024, gold had climbed to $2,800 per ounce, propelled by expectations of Federal Reserve rate cuts, persistent inflation concerns, and rising global debt levels. Just months later, on February 24, 2025, gold surged further to $2,963 per ounce, as investors sought protection against currency devaluation and market instability.
Gold in 2025
The escalating trade war between the U.S. and its major trading partners has rattled financial markets, pushing investors toward gold as a hedge against economic instability. Recently, U.S. President Donald Trump threatened a 200% tariff on alcohol imports from the European Union (EU) after the EU proposed a 50% tariff on American whiskey. These trade disputes have raised fears of rising inflation, as higher import taxes increase costs for businesses and consumers, reducing purchasing power and slowing economic growth.
Beyond trade tensions, expectations of Federal Reserve rate cuts, central bank gold purchases, and geopolitical instability have fueled gold’s rally. A weaker U.S. dollar and persistent inflation concerns have strengthened demand, while investors continue pouring money into gold-backed ETFs and physical bullion, seeking stability amid market uncertainty.
Many investors fear that Trump’s unpredictable tariff policies and protectionist stance will drive up costs, disrupt supply chains, and weaken economic growth. As uncertainty grows, gold remains a preferred asset for those looking to safeguard their wealth.
As the world becomes more unstable, there is more gold demand as a safe haven. Also, the risk of a recession, which would trigger lower interest rates, has been increasing the longer the Federal Reserve keeps rates high. The combination of a desire for a safe-haven and recession risk has led to a breakout in gold which has been building up a large cup and handle technical analysis pattern since 2011 (see our previous post on gold).
As we wrote in July 2020 in the article, "Analysis of Gold (using ETF GLD)," the formation of a cup and handle pattern would be a very strong single of a breakout. Continued purchases by central banks, strong OTC retail demand, and conflict fueled desire for safe-haven shelter could push gold to our 5 year target price range set in 2020 of $3,100-$3,500.
Sources
- Gold Prices - 100 Year Historical Chart | MacroTrends
- Gold Demand Trends Full Year 2023 | World Gold Council.
- China Gold Reserves
- Gold Market Commentary: Gold hit new highs in 2023 | World Gold Council
- Outlook - Gold Demand Trends Full Year 2023
- Gold ETF: Stock, Holdings and Flows | World Gold Council
- Gold ETFs Recorded 244-Tonne Outflow In 2023 - World Gold Council
- Central Banks Gold Reserves by Country | World Gold Council
- Why Did Gold Prices Surge To a Record This Week?
- Aggressive Gold Purchases by Central Banks - The Jerusalem Post
- Gold rallies to new records on worldwide tensions, central bank buying
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