Gold soars past $4,000 on strong demand from funds and speculators

At the height of the cryptocurrency boom, when digital assets skyrocketed in value in 2023 and 2024, the idea spread that bitcoin could become the new gold — the ultimate safe haven asset to which investors should automatically allocate part of their portfolios, even ahead of the precious metal itself.

But now, as geopolitical risks mount and the U.S. dollar loses some of its appeal as a global benchmark, gold has firmly reasserted its dominance. Bitcoin also hit record highs this week, up nearly 20% so far this year, but the precious metal has no rival in sight. It is the best-performing asset of 2025, having gained more than 50% — a surge unseen since the 1979 oil crisis. And the rally shows no signs of stopping: the structural factors behind the rise remain unchanged, and more investors — institutional, speculative, and retail alike — are joining the party. Gold has gone crypto.

The metal is now in its third consecutive year of gains and has nearly doubled in value between 2024 and 2025, shattering record after record until it broke through the $4,000-per-ounce barrier on Wednesday. Investor euphoria is reflected in the massive inflows into gold ETFs (exchange-traded funds that trade like stocks). According to the World Gold Council, the third quarter of 2025 set an all-time record for inflows into physically backed gold ETFs, totaling $26 billion.

Central bank purchases have been a key driver of the rally. Monetary authorities have been stockpiling gold as a way to diversify reserves, reduce their dependence on the U.S. dollar, and even, if necessary, shield themselves from U.S. sanctions. The expected interest rate cuts in the United States are another factor: holding gold becomes more attractive when bond yields fall and inflation remains a threat.

Moreover, the U.S. dollar’s recent weakness, driven by Donald Trump’s economic policies, has added even more luster to the metal’s safe-haven appeal. “The opportunity cost of holding gold is falling thanks to declining real interest rates in the U.S., while expectations of further broad U.S. dollar weakness are another tailwind for gold,” UBS said in a note.

Persistent geopolitical instability is another factor supporting the rise of the precious metal. Indeed, gold surpassed $4,000 for the first time this week, coinciding with concerns over the partial shutdown of the U.S. federal government and yet another political crisis in France, following the resignation of Prime Minister Sébastien Lecornu. But beyond these elements — which have fueled gold’s rise to varying degrees for months — a new catalyst has emerged in recent weeks: the entry of institutional and speculative investors into the market.

UBS has just raised its central forecast for gold from $3,800 by December — a level it has already surpassed — to $4,200 in the coming months, including a bullish scenario where it could reach $4,700. The Swiss bank said the upward revision reflects increased investment in ETFs, particularly by institutional investors, as confidence in other traditional diversification assets has weakened.

Goldman Sachs also pointed to stronger speculative positioning among the drivers of gold’s acceleration in recent days, alongside the rapid rise in Western gold ETF holdings and the likely reactivation of central bank demand after the summer pause.

For Kerstin Hottner, head of commodities and portfolio manager at Vontobel, “the price of gold is likely to remain supported by cyclical factors such as new rate cuts by the Federal Reserve, triggered by a weakening U.S. labor market and growth risks stemming from new U.S. tariffs.” She also highlighted structural factors — including high geopolitical tensions, concerns over the Fed’s independence, and growing U.S. debt — which “point to sustained demand from investors and central banks.” “Moreover,” she added, “strong ETF inflows and rising investment demand from private investors provide an additional boost, since even small portfolio reallocations toward gold could unlock significant upside potential.”

Kenneth Griffin, billionaire investor and head of hedge fund Citadel, said this week in an interview with Bloomberg that investors are starting to see gold as a safer haven than the dollar. “We’re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis US sovereign risk,” he said.

Goldman Sachs estimates that every 100 tonnes of net gold purchases by major market players (ETFs, central banks, and speculators) corresponds to a 1.5% to 2% rise in the gold price.

“Nothing seems to be stopping the rally in gold and silver markets,” added Carsten Menke, head of Next Generation Research at Julius Baer. Boosted by gold’s momentum and its industrial applications, silver has surged more than 60% this year, reaching levels not seen since 1980 and drawing ever closer to the $50-per-ounce mark.

Pedro del Pozo, director of Financial Investments at Mutualidad, expects gold to remain near record highs for some time. “It’s no exaggeration to speak of a genuine boom. Gold has once again taken up its historical role as the ultimate safe haven,” he said, while warning that such high prices “should be seen as a cautionary signal — a reminder that riskier assets may be showing some dislocation relative to the true perception of uncertainty. In other words, precious metals are symbolically absorbing the tension that the rest of the market prefers not to display.”

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