September 2, 2025

QuickTakes

Gold Is Shining More Brightly Than

Ever Before

We turned bullish on gold last year when the spot price of the shiny metal decisively rose above $2,000 per ounce (chart). We attributed this new bull market in gold to Russia's invasion of Ukraine in February 2022. In response, the United States and its allies froze the international reserves of Russia's central bank. That convinced the central banks of countries with autocratic governments, which are naturally hostile to the US, to increase their gold purchases.

Earlier this year, when the price of gold was slightly below $3,000, we projected that it might remain in the rising channel that started in late 2023, reaching $4,000 by the end of this year and $5,000 by the end of 2026 (chart). So far, so good. Today, the spot price of gold broke out of a recent consolidation pattern to a new record high of over $3,500. The nearby futures contract hit $3,600 today.

We reckoned that President Donald Trump's attempts to reorder the world's geopolitical order, including America's relationships with its major trading partners, might be unsettling and bullish for gold. Similarly, his attempt to order the Fed to lower interest rates would compromise its independence and be bullish for gold. In addition, the bursting of China's housing bubble has had a significant adverse wealth effect on Chinese savers, who've flocked to gold as an alternative safe asset. Furthermore, the rising standard of living in India has increased wealth, thereby boosting demand for gold, which is widely regarded as a valuable asset.

Our bullishness is supported by the "Gold Put," provided by central banks that are increasing the percentage of their international reserves in gold (chart). International gold reserves currently account for 15.0% of international reserves, according to the IMF. That's up from 9.0% when Russia invaded Ukraine.

Keep in mind that some of the increase in the percentage of gold in international reserves is attributable to gold's rising price (chart).

Over the past couple of trading days, the volume in the SPDR Gold Trust ETF (GLD) has increased significantly (chart).

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