Gold prices have hit historic highs, surprising analysts and investors alike. Since the start of the year, gold has surged by nearly 60%, far exceeding expectations. Leading investment banks have revised their forecasts, now predicting gold could reach $4,900 per ounce by the end of 2026.
While lower interest rates have played a role, the primary driver of this rally is geopolitics. Central banks in China, Poland, India, Kazakhstan, and others are actively buying gold and reducing their dollar holdings. Gold’s share in global reserves has reached 27%—a 29-year high—while the dollar’s share has dropped to 59% as of Q1 2025.
This trend is driven by rising geopolitical and economic uncertainty. As alternative centers of influence emerge and global finance fragments, countries seek assets not controlled by any single nation. Gold has become the preferred neutral asset.
Continued conflict in Ukraine, instability in the Middle East, trade wars, and a weakening dollar are all boosting gold demand. Private investors in China, Turkey, and Egypt are also increasing gold purchases to hedge against inflation and currency depreciation.
Gold production is rising slowly due to technical and environmental challenges, making it hard to quickly raise supply. With demand far outpacing supply, prices keep climbing.
Central banks are also shifting strategy, repatriating more gold for domestic storage instead of keeping it abroad. This signals a long-term structural shift: dollar hegemony is waning and gold’s role in reserves is rising.
Overall, strong demand from both central banks and private investors is expected to support a prolonged rise in gold prices for years to come.
