The price of gold is now over $4,000 an ounce: The reason why that should scare all of us

A year ago, analysts forecast that the price of gold would hit $2,600 per ounce by the end of 2025. It has now crossed the $4,000 per ounce mark, and the growth in its value doesn’t appear to be stopping anytime soon.

The price of bullion is nearly double what is was two years ago and is up more than 50% over the past year. It is pulling the price of other precious metals, silver, platinum, and palladium, upwards in its wake as well.

“The gold market appears to be experiencing a ‘once-in-a-generation move’,” analyst at consultancy SP Angel John Meyer told Reuters.

Dan Smith, managing director of Commodity Market Analytics, had another view. “The rally is unbelievable, telling us that something bad is happening and that we should be nervous,” he said.

What is driving the surge in gold prices?

Gold is rising at its fastest clip since 1979, when markets were thrown into turmoil over the oil crisis that year. Troubling investors this time around are a number of factors.

Russia’s war in Ukraine is still a concern as well as sluggish European growth. There are the trade tariffs put in place by President Donald Trump, who has also spooked markets with his threats against Federal Reserve independence.

On top of that, there are concerns over lingering inflation, the strength of the dollar and US Treasuries, which have been the reserve asset for several decades. Investors and central banks are replacing the latter with gold to give their portfolios ballast to steady them through potentially volatile seas ahead.

According to consultancy Metals Focus, central bank purchases of gold this year could be up to 900 metric tons, which would be double the 2016-2021 annual average. Over each year since 2022, they’ve acquired in excess of 1,000 tons.

When will the surge in gold prices stop?

Concerns that the gold market could drop at any time were assuaged with gold breaking $4,000. Furthermore, at the moment all the traditional drivers of the gold market are happening right now BNP Paribas analyst David Wilson told Reuters, helping to keep the bull market stampeding forward.

“What series of events has to happen to make the world take a deep breath and go actually, it’s not so bad? Can we see a change in the U.S. policy on tariffs, trade, immigration?” he pondered. “Right now, it’s difficult to see what events would suddenly change sentiment about the global outlook.”

Goldman Sachs has forecast that the price will continue to surge, predicting gold will hit $4,900 per ounce by December 2026.

“The attitude at the moment seems to be that maybe it will keep on going,” Wilson said.

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