Gold Prices Surge to $4,000 Per Ounce, Fueling Global Interest

Gold prices have skyrocketed to US$4,000 per ounce (NZ$6,900), marking a remarkable increase of 50 percent in 2025 alone. This surge represents the largest rally for gold since the 1970s, raising questions about whether this trend is driven by solid economic fundamentals or simply a fear of missing out among investors.

According to Amova, a fund management firm, central banks have been consistently purchasing physical gold over the years. These institutions typically hold gold alongside foreign currency bonds as part of their reserves. In light of recent geopolitical tensions, particularly following the freezing of Russian currency reserves in European banks due to the invasion of Ukraine, some central banks may be looking to diversify away from the US dollar and other fiat currencies.

Quantifying the amount of gold acquired by central banks remains challenging, often shrouded in speculation rather than precise data. The physical gold market is largely opaque and operates over-the-counter, unlike gold futures and derivatives traded on exchanges in cities such as New York, Shanghai, and Tokyo.

Emergence of Gold ETFs

Another significant factor contributing to the rise in gold prices is the growing popularity of exchange-traded funds (ETFs). Fergus McDonald, head of bonds and currencies at Amova, noted that ETFs have become increasingly appealing to institutional investors. This trend has made gold more accessible than ever.

“Gold is much easier to buy now—you can purchase it with a click on your computer,” McDonald explained. This convenience addresses one of the key drawbacks of investing in physical gold: the need for secure storage. He believes this ease of access has played a crucial role in driving the current rally, allowing investors worldwide to capitalize on the momentum.

Gold has long been viewed as a store of wealth, comparable to established asset classes like bonds, equities, or currencies. McDonald mentioned that rising dissatisfaction with government economic policies has also influenced gold’s price trajectory, reflecting broader sentiments in both gold and digital currency markets.

Long-Term Investor Trends

Despite soaring prices, retail investors remain steadfast in their commitment to gold. Online gold exchange Goldie reported that gold continues to be seen as a tangible and trusted asset that preserves value over time. The company asserts that gold’s historical performance speaks volumes, particularly during periods of market volatility when gold often outperforms other assets.

Founder Cameron MacLachlan expressed surprise that record prices have not prompted more clients to cash out. Remarkably, over 98 percent of their investors are holding onto their gold for the long term. “Gold is regarded as a safe, slow, and steady investment,” he stated. MacLachlan also noted a demographic shift in their client base, which now tends to be younger and predominantly female, reflecting a more tech-savvy and financially informed group of investors.

As the gold market continues to evolve, it remains to be seen whether this upward momentum will sustain. While the current surge is bolstered by both fundamental factors and investor sentiment, McDonald cautioned against assuming perpetual growth. “Momentum is a great thing,” he said. “But once it passes, gold may not see significant price increases for many years or could even decline in value.”

This dynamic landscape underscores the complex interplay between investor behavior, market fundamentals, and external geopolitical factors, shaping the future of gold as an investment.