Records Broken as Gold Surges Beyond USD $3,000oz

The price surge has seen gold deliver an incredible year-to-date return of 17% (in USD terms), with silver, which is now trading at USD $33.46 (+16% year-to-date) joining the precious metal party.

Gold’s incredible run only becomes more impressive when you consider the recent volatility in the share market, with the relative performance between the two now sitting at +20% in gold’s favour in 2025.

This relative outperformance is expected to continue in the period ahead, driven by a range of factors including;

• Persistent fears over higher inflation, which (at a core level) is still sitting above 3% in the United States. In years gone by, that kind of inflation level would have pressured central banks to raise rates.

• The continued move toward lower interest rates, with the United States Federal Reserve this week announcing a tapering of the speed at which they will run down their balance sheet.

• A slower pace of economic growth, which we are almost certain to see in 2025, with fears of an outright recession rising.

• Geopolitical uncertainty, with fears over developments in Ukraine and the Middle East likely to remain high-level ‘event risks’ for the foreseeable future.

• We are also set to see continued accumulation from the world’s central banks, with demand off to solid start in 2025, as countries like China and Poland continue to stockpile bullion holdings.

These are all factors we discussed in a recent interview with Alicia Barry from ABC news, which you can access here.

USD $3,000 and the Psychology of the Markets

The World Gold Council wrote an excellent report this week in the aftermath of the gold price reaching the USD $3,000 price point, with the article including the following three key observations;

• Gold’s new milestone: Gold recently crossed US$3,000/oz intraday – a headline-worthy event, but the true significance for gold lies in the broader economic trends driving its rise. 

• Price momentum: Gold surged from US$2,500/oz to US$3,000 in just 210 days, pushing it three standard deviations above its 200-day moving average. 

• Market fundamentals: While gold may face some consolidation due to the speed of its latest move, the combination of geopolitical and geoeconomic uncertainty, rising inflation, lower rates and a weaker US dollar continue to provide powerful tailwinds to investment demand. 

The article also included the below chart, which noted that it has taken just 210 days for gold to rally USD $500 (from USD $2,500 to USD $3,000oz).

This is barely one-eight of the ‘normal’ time, with data suggesting it has historically taken more than 1,700 days (or more than 4.5 years) for gold to rise by USD $500oz.

It is worth noting of course that a USD $500oz move in gold is now far less significant in percentage terms than it use to be, as the table below highlights. For example, while the gold move from USD $500 to USD $1,000 represented a 100% gain for investors, the most recent USD $500 move was “only” a 20% increase.

While the above table puts recent (and potential future) price gains into perspective, there is little doubt the USD $3,000 price point is a psychologically important one for the broader market, and for investors.

Gold is now unquestionably in bull market mode.

This does not mean it will continue to go up in a straight line, or that there will not be continued corrections in this cycle. Indeed, for those (me included) who are already long gold and silver, those corrections may “feel” worse now, as the dollar pullbacks will likely be larger, even though the percentage falls likely will not be.

For example, a 10% correction would now equate to just over USD $300. I’d be topping up my kids ABC Bullion Gold Saver if that happened (over and above my regular monthly savings into the product) and adding more precious metals to my SMSF in such a scenario.

The potential for corrections aside, the other important part of the USD $3,000 price point, and gold becoming mainstream news again is that every day, more and more investors will be noticing that precious metals are now strongly outperforming stocks.

For those that do not own gold, and who manage their own investments, they are going to be asking themselves why?

If they use a financial advisor or a broker, they are going to be calling or emailing them and asking why?

In Australia, maybe they will look at the asset allocation of their superannuation fund, where they will find that there is almost certainly no allocation to gold in it. They will be reaching out and asking why?

They will likely hear answers like:

• Gold is volatile in the short-term.

• Gold does not pay any income.

Those answers will not be good enough anymore. Not because they are not true. They have always been true. They have not stopped gold rising to USD $3,000oz.

The market has spoken, and it is stating clearly that while it may be true that gold doesn’t pay an income, the bigger truth is that it is also exceptionally liquid, has no credit risk, is accepted globally, has an unmatched record as a portfolio diversifier and inflation hedge, and a 5,000 plus year track record of protecting wealth.

Assuming those attributes continue to become more valuable to investors in the years ahead, then there is a lot longer to run in this bull market cycle.

Jordan Eliseo
General Manager, ABC Bullion Australia

^{Disclaimer: This document has been prepared by Australian Bullion Company (NSW) Pty Limited (ABN 82 002 858 602) (ABC). The information contained in this document or internet related link (collectively, Document) is of a general nature and is provided for information purposes only. It is not intended to constitute advice, nor to influence any person in making a decision in relation to any precious metal or related product. To the extent that any advice is provided in this Document, it is general advice only and has been prepared without taking into account your objectives, financial situation or needs (your Personal Circumstances). Before acting on any such general advice, we recommend that you obtain professional advice and consider the appropriateness of the advice having regard to your Personal Circumstances. If the advice relates to the acquisition, or possible acquisition of any precious metal or related product, you should obtain independent professional advice before making any decision about whether to acquire it. Although the information and opinions contained in this document are based on sources, we believe to be reliable, to the extent permitted by law, ABC and its associated entities do not warrant, represent or guarantee, expressly or impliedly, that the information contained in this document is accurate, complete, reliable or current. The information is subject to change without notice, and we are under no obligation to update it. Past performance is not a reliable indicator of future performance. If you intend to rely on the information, you should independently verify and assess the accuracy and completeness and obtain professional advice regarding its suitability for your Personal Circumstances. To the extent possible, ABC, its associated entities, and any of its or their officers, employees and agents accepts no liability for any loss or damage relating to any use or reliance on the information in this document. It is intended for the use of ABC clients and may not be distributed or reproduced without consent. © Australian Bullion Company (NSW) Pty Limited 2020.}