Why Gold Hit $3,000/ Ounce - And May Keep Climbing

In the past few months, the gold price surpassed the $3,000/ounce mark, setting a seemingly endless series of new all-time highs. Reaching this long-awaited milestone, gold has captured the attention of traders, investors and financial analysts worldwide.

But what are the key forces propelling the precious metal to unprecedented heights? Is economic uncertainty or geopolitical tension the biggest market driver? Or should stock market turmoil and currency devaluation be considered the key factors? And what about the massive central bank gold purchases? 

The correct answer is probably all of the above.  This article analyses the current gold landscape and the main reasons behind the astonishing rally of the most celebrated precious metal, examining the implications for the global economy.

Central bank gold purchases

Since 2010, central banks have been net gold buyers. But in the last few years, particularly since 2022, they increased their gold purchases. In the last three years (2022 to 2024), the central institutions collectively bought more than 1,000 tonnes of gold per year, generally with the aim of increasing the amount of gold held in reserve, while the de-dollarisation process continues. It is therefore clear that these massive numbers are playing a crucial role in shaping the dynamics of the physical gold markets.

For more insight about gold and the US Fed, read: Can Trump and Musk take on the Fed?

Is the greenback still safe?

The recent spike seen in US Treasury yields could be expected to be negative news for gold. Indeed, US bonds are generally considered as a safe-haven, and consequently,  a competitor for gold. In other words, if their yield is higher, the implicit cost for holding gold is more significant.

But this time, the scenario is completely different, as growing yields were the consequence of a lack of trust in the US dollar and doubt in the sustainability of America’s debt with President Donald Trump’s promised fiscal cuts. Therefore, even with higher yields, many investors added gold to their portfolios. Once again, the precious metal confirmed its traditional role as a safe-haven asset.

In addition, there are growing chances of seeing a direct intervention from the Federal Reserve. And other expansive monetary policies and quantitative easing could spark fears of weakening fiat currencies, further enhancing gold’s appeal to  investors.

Economic uncertainty and geopolitical tensions

Frequently, when there is economic turmoil, gold tends to surge. In the last few weeks, the debate about the introduction of new tariffs increased the risks of a worldwide trade war, and consequently, the concerns about a potential global recession. Moreover, ongoing conflicts in the Middle East and in Ukraine, as well as political instability in various regions, have created an environment of uncertainty. Again, gold’s ability to preserve value during periods of financial instability makes it an attractive option for protecting wealth.

Inflationary Pressures

Since 2021, inflation has returned as a keyword also for the major economies, with a long list of central banks (including the US Federal Reserve, the ECB and the Bank of England), which struggled to fight the continuous rise in the price of goods. And the inflationary pressures could be included in the factors driving the gold rally.

Indeed, rising consumer prices eroded the purchasing power of fiat currencies, pushing many investors to bet on gold as a hedge against inflation.

The role of emerging markets

Nations such as China, India and other emerging countries are playing a significant role in the current gold price scenario for many reasons. The central banks from these  countries have increased their accumulation of gold in their reserves, with some rumours about the possibility of the creation of a gold backed currency by BRICS nations.

Looking from a microeconomic point of view, emerging markets often experience relatively quick economic growth, generating new investors as their populations accumulate wealth. This scenario could lead to an increase in the demand for gold, both as an investment (also considering the traditional instability of many currencies from the emerging markets and for jewellery.

Conclusion

The continuous increase of the gold prices to record levels above $100 per gram and $3,000 per ounce is yet another signal of the massive attention that investors are giving to gold. The yellow metal has rallied more than silver in 2025, pushing the gold to silver ratio above 100, well above the historical average.

Nowadays, with investors having to navigate a challenging scenario between inflation risks, tariff concerns and recession fears, gold continues to play a pivotal role in the global financial system and in financial portfolios, while the bullish trend of the last few years still seems to be strong.