Precious Metals

Gold Price Is Going Up! What’s Driving the Rally and What’s Next?

Ruby Layram 28th Mar 2025 No Comments

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Gold is stealing the spotlight once again! On March 28, 2025, the price of spot gold skyrocketed to an all-time high of $3,079.01 per ounce, with U.S. gold futures not far behind at $3,086.80.

Investors are buzzing, and for good reason- this dazzling rally isn’t happening by chance. A perfect storm of economic shifts, geopolitical tensions, and central bank maneuvers is fueling gold’s meteoric rise. So, what’s really driving this surge, and where could prices go next?

What’s Making Gold Go Up?

Gold’s record-breaking rally isn’t just a fluke. It’s being fueled by a mix of economic turbulence, shifting policies, and global uncertainty. From trade wars to central banks stockpiling reserves, here’s a closer look at the key forces driving gold’s meteoric rise.

Trade tensions

If there’s one thing markets hate, it’s uncertainty- and President Trump’s latest auto tariffs have thrown more fuel on the fire.

The move has rattled global trade relations, sparking fears of a deeper trade war and sending investors scrambling for safe-haven assets like gold.

With equity markets feeling the pressure, gold is stepping in as the go-to refuge, proving once again that when chaos hits, this precious metal shines the brightest.

See: 6 investments that hedge against inflation

Central banks are stocking up

It’s not just individual investors piling into gold. Central banks are hoarding it too.

China, in particular, has been aggressively increasing its gold reserves since November, a trend that experts predict will continue for the next three to six years.

Why? Policy uncertainty and economic instability are pushing governments to hedge their bets, reinforcing gold’s role as a rock-solid store of value.

When even the biggest players in the game are loading up, you know something’s up.

Rate cuts on the horizon?

The Federal Reserve has decided to hold off on raising interest rates, and whispers of future cuts are making their way through Wall Street.

For gold, this is music to its ears.

Lower interest rates mean investors don’t have to worry about missing out on yield from other assets, making gold- despite its lack of dividends- an increasingly attractive option.

If rate cuts do materialize, expect gold’s upward march to continue.

Inflation continues to rise

Inflation has been quietly chipping away at the value of fiat currencies, leaving investors searching for protection.

Enter gold. Historically, this metal has been one of the best hedges against rising prices, and in today’s high-inflation environment, it’s proving its worth yet again.

With purchasing power dwindling, gold is standing tall as the ultimate shield against economic erosion.

What’s Next for Gold in 2025?

With gold on a historic run, financial institutions are scrambling to adjust their forecasts- and they’re only going higher.

Goldman Sachs has bumped its year-end target to $3,300 per ounce, citing relentless central bank buying and investor appetite.

Meanwhile, Bank of America is even more bullish, predicting gold could hit $3,500 thanks to continued demand from central banks, ETFs, and China’s booming insurance sector.

That said, the road ahead isn’t without twists and turns. A potential peace deal between Russia and Ukraine could spark short-term selling, as geopolitical tensions ease.

On the flip side, if stock markets take a nosedive, some investors may be forced to sell gold to cover losses elsewhere- creating a temporary dip that could serve as a buying opportunity.

Gold’s record-breaking surge is being driven by a perfect mix of global uncertainty, central bank buying, inflation fears, and shifting monetary policy.

While the outlook remains strong, savvy investors will keep an eye on key economic and geopolitical shifts before making their next move.

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