Gold Surges as Extreme Turbulence Hits Markets

Gold prices hit new records in overnight trade, with the precious metal trading up toward USD $3,175oz. The strong price gains have continued this morning, with the precious metal spiking above USD $3,200oz, with gold now up 23% year-to-date.

The surge occurred against a backdrop of continued market chaos across risk assets, with the S&P 500 and NASDAQ down 3% and 4% respectively (it should be noted both markets saw one of their biggest one-day bear market rallies on record on Wednesday night Australian time). While US 10-year bond yields rose toward 4.5%, with the Trump administration option for a 90-day delaying to the implementation of the punitive tariffs that they announced on “Liberation Day” just over a week ago.

Silver, while steadying in overnight trade, has not seen the same support that gold has in recent days, last trading at USD $31.15oz and AUD $50oz, with the gold to silver ratio now sitting at 102.

If history is any guide, then in gold terms at least, silver appears extremely cheap, with the precious metal often outperforming after periods of market turbulence like the one we are experiencing right now.

Clients of ABC Bullion certainly appear to be of this view, with silver sales surging against a backdrop of near-record demand for precious metals amongst investors in Australia.

Precious Metal Market News

Given the surge in volatility in the past week, combined with gold once again coming to the fore as a safe haven asset, it is no surprise that the precious metal is very topical once again, with a range of market commentary about gold being issued in recent days.

Some of the more noteworthy articles we have come across, touching on both gold and silver include.

• UBS issuing a note to clients which aligns with our bullish view on silver expressed above. The bank noted that “silver prices below $30oz are unlikely to last over the next 3-6 months” with the suggestion the precious metal could rise toward USD $38oz in the second half of 2025. That would be a more than 20% rally should it eventuate.

• World Gold Council CEO David Tait expressed his bullish outlook for precious metals, noting that gold’s safe haven status will only be bolstered by fears of higher inflation, debt sustainability and broader market volatility given the recent tariff developments.

• Evidence of the surge in precious metal demand across parts of Asia, with Indonesians flocking to gold according to Reuters.

• ETF issuer Van Eck also released a bullish note on gold, looking at the impact of tariffs, and the changing landscape as it relates to interest rate markets, with at least four cuts in the United States now expected this year. Van Eck also noted that in the past, gold has on average risen by 13% in the first 250 days after the first Fed rate cut in an easing cycle, and by 25% in the 500 days that follow said cut.

• An update on the outlook for central bank demand, by Shaokai Fan of the World Gold Council, who looked at the reasons why central banks continue to stockpile the precious metal, with a regional breakdown of demand. 

• Gold’s role not only during a crisis, but in its aftermath was also discussed in a recent note released by TD Securities, who noted that; “Gold has historically outperformed in periods following an economic shock, serving as a relative safe haven for investors".

The research from TD looked at multiple risk off events (LTCM crisis, Lehman Bros collapse etc) with the findings showing that not only does gold almost always outperform, but that the outperformance is meaningful in percentage terms, and that the scale of the outperformance grows over time.

A study like that is highly relevant given overnight market moves, where USD gold is outperforming US equities by roughly +7% in a single day.

How High Can Gold Go?

Last but not least, this week we have also seen Goldman Sachs release a bullish outlook for the precious metal.

Looking at the various drivers of gold demand, the bank suggested that if we see a combination of strong central bank demand (of circa 110 tonnes a month vs baseline expectations of 70 tonnes a month of buying) and gold ETF holdings return to their COVID era highs, then we could see the precious metal trade up toward USD $4,200-USD $4,500oz.

If a USD gold price rally of such magnitude were to occur, it would imply that the AUD gold price could be trading up toward $7,000 per ounce.

Jordan Eliseo
General Manager, ABC Bullion Australia

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