Investors Turn to Gold as Markets Tumble

Precious metal markets surged again this week, with the price of gold rising above USD $2,980 per troy ounce (oz). Now only a whisker away from the key USD $3,000oz price point, gold is currently +14% in USD terms on year-to-date basis in 2025, while silver has rallied by 17%, and is currently trading just below USD $34oz.

In Australian dollar terms, gold is currently trading at AUD $4,763oz, while silver is now above AUD $54oz, having risen almost AUD $20oz in the last year alone.

A rapid escalation in trade tensions and tit-for-tat on tariffs, which will impact Australia directly, as well as fears over higher inflation are all driving investors towards gold, with ETF investors having now firmly re-established a buying pattern, with some of strongest inflows on record into these products in recent weeks.

Central bank demand also remains supportive, while the general investing public are again coming to appreciate the safe haven status of gold, which is now leading markets in 2025 due to its strong performance in absolute terms, and more especially in relative terms, with the recent crash in markets leading the S&P 500 in the United States to a -6% return for the year so far, while Bitcoin is -14%.

While gold could stabilise at current price levels for the next nine months and still have recorded an impressive return for 2025, analysts expect it will continue to rise, with Joni Teves at UBS calling for a USD $3,100oz price by the end of the year. Macquarie are even more bullish, suggesting prices could soar to USD $3,500 (this would likely equate to an almost AUD $6,000oz price point if so) this year, with their strategists noting that they; “view gold’s price strength to date, and our expectation for it to continue, as primarily being driven by investors’ and official institutions’ greater willingness to pay for its lack of credit or counterparty risk.”

Capital Rotation into Gold Has Only Just Begun

Markets have hit a key inflection point this year given the surge in the gold price, and the pullback in equity markets, with gold now breaking out against the stock market (hitting a 4-year high), while it is also breaking out of 10-year long base when measured against a traditional investment portfolio made up of 60% equities and 40% bonds.

This can be seen in the below three part chart that covers a fifty year time period. The chart was created and shared by gold market analyst Jordan Roy-Byrne in this article, with the chart showing:

• The USD per ounce price of gold

• The USD per ounce price of gold vs a 60/40 portfolio of equities and bonds

• The USD per ounce price of gold vs the S&P 500

  

  As Roy-Byrne noted; “In recent years, the bull market in precious metals has not felt like one due to the stock market’s strength, which has limited capital flows in precious metals.  However, that is beginning to change as capital has already started to move out of the Mag7, tech, and conventional stocks in favour of Gold."

  The fact that capital is only just now beginning to favour gold and other precious metal investments over more traditional assets, and that gold is now only just now breaking out against suggests this trend has many years left to run.

   It should be incredibly rewarding for precious metals investors that have the patience to sit tight, and the ability to ‘buy the dip’ as and when the inevitable corrections in the bull market cycle play out.

  

  Jordan Eliseo
  General Manager, ABC Bullion Australia

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