In Depth: A Nervous World Seeks Shelter in Gold

Gold prices have surged dramatically in 2024 and 2025, breaking multiple records and providing significant profits to the mining industry. This escalation is fueled by economic uncertainty, persistent geopolitical conflicts, the enduring effects of pandemic-driven monetary policies, and anticipation of Federal Reserve interest rate cuts. These combined factors have cemented gold as the leading alternative asset over the past year and a half, igniting a wave of corporate acquisitions and sustaining bullish forecasts from industry analysts.[para. 1][para. 2][para. 3]

Since early 2025, spot gold prices have risen by 40%, reaching 26 new highs in the first half of the year, on top of 40 records set in 2024, according to the World Gold Council (WGC). After bottoming out at $1,600 an ounce in late 2022, gold doubled in value, peaking at $3,534.10 in August 2025. This price rally has translated into exceptional financial results for major gold producers. For example, Newmont Corp., the largest global gold producer, saw its net profit jump 286% year-on-year to $3.95 billion in the first half of 2025, while Zijin Mining Group of China forecast a 54% increase to 23.2 billion yuan ($3.2 billion).[para. 4][para. 5]

The rally is explained by several catalysts: quantitative easing after the pandemic, a global drift from the U.S. dollar (de-dollarization), declining U.S. Treasury bond values, and increased gold purchases by central banks. Geopolitical conflicts, notably in Ukraine and the Middle East, and unpredictable U.S. trade policies under President Donald Trump have also heightened economic uncertainty, making gold a preferred safe-haven asset. Trump’s inconsistent economic strategies, particularly the push for rate cuts combined with protectionist tariffs, have further contributed to market confusion and reinforced gold’s appeal.[para. 7][para. 8][para. 9][para. 10][para. 11]

Forecasts remain optimistic. Goldman Sachs projects gold could hit $3,700 per ounce by the end of 2025 and $4,000 by mid-2026 due to robust central bank buying and structural demand. Citibank recently revised its three-month price target upward to $3,500. A primary source of optimism is the constraint on global gold supply: over 80% of all known gold reserves have already been extracted, leaving about 59,000 tons, underpinning expectations for sustained high prices into the future.[para. 12][para. 13][para. 14]

Central banks and investors are now the main engines of demand. Global central bank gold purchases exceeded 1,000 tons annually from 2022 to 2024, compared to 400-500 tons per year the previous decade. By 2024, gold became the world’s second-largest reserve asset, comprising 19.8% of global reserves. China’s central bank, for instance, extended its buying spree to 73.96 million ounces by July 2025. Meanwhile, investment demand—particularly via exchange-traded funds (ETFs)—has exploded, with ETF holdings jumping by 397 tons (a 250% gain from the previous quarter) and total ETF assets reaching $382.8 billion by mid-2025.[para. 17][para. 18][para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25]

A major impact of these market dynamics has been a global boost in gold-related mergers and acquisitions (M&A), with the sector seeing deals valued at $21.1 billion in 2023 and $19.3 billion in 2024. Major deals include Newmont’s $16.5 billion acquisition of Newcrest Mining and Zijin’s $1 billion purchase of Ghana’s Akyem mine. Chinese companies, while less established internationally, are rapidly expanding overseas, although their impact on overall gold supply remains relatively limited.[para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36][para. 37][para. 38]

Overall, while persistent uncertainty and risk keep gold prices volatile, the dominant trend remains strongly upward, propelled by geopolitics, central bank diversification, and surging investment appetite.[para. 39]