Why Now?
The current driving force behind the gold price is a combination of several key factors – fears of recession, political tensions, and a weakening U.S. dollar. As a result, investors seek to minimize potential volatility in the value of their portfolios, which is also confirmed by leading investment banks Goldman Sachs and UBS. UBS estimates that total gold demand this year should reach 830 metric tons, nearly double the initial forecast at the beginning of the year. Data from the World Gold Council survey reveal the potential for gold reserve increases among 95 percent of participating central banks – mainly in emerging market countries seeking protection against currency and geopolitical risks.
Political Situation
It was not long ago that I wrote about surpassing the USD 3,000 threshold, mainly due to changes in Donald Trump’s customs policy, and here we are again with a new all-time high – again partly due to this risk. Although Trump stated in August that changes in tariff rates would not apply directly to gold, the general disruption of the global supply chain further encouraged investors to buy gold as a hedge.
Hold, Sell, or Buy?
After breaking through the USD 4,000 per ounce level, Bank of America raised its gold price outlook for 2026 to USD 5,000. Goldman Sachs adjusted its estimate close to this level, setting a slightly lower prediction of USD 4,900 per ounce by December of next year. Although the rise in gold is extreme, considering the factors mentioned above – such as China’s efforts toward de-dollarization and investor concerns over geopolitical risks – these are likely to remain the main drivers of gold’s price growth. If they persist, gold could exceed the USD 5,000 threshold even sooner than banks predict. One thing is certain – it’s not a question of if, but when gold surpasses this historic milestone, because it’s only a matter of time. [1]
With Caution Above All…
The euphoria resulting from gold’s bullish rally may tempt some investors and traders to buy without more detailed planning, but such an approach carries exponentially higher risk in the long term. A more reasonable strategy is to look at the situation objectively and assess all possible scenarios. Fundamental factors still favor growth prospects, but buying at the current record price levels significantly reduces the risk-to-reward ratio. It’s more prudent to wait for a possible correction (similar to shopping during sales when we can buy at a better price).
Different Approaches to Buying
Besides timing the market entry, one of the most popular strategies is regular – gradual and long-term – purchasing. It is recommended to do so roughly once a month. The advantage is that there’s no need to monitor the current price, since the main goal is the protection of financial assets against inflation.
Pressure on the Jewelry Industry
Not everyone is happy about the rise in gold prices. While investors celebrate the high appreciation of their investments, jewelers are worried. Constant price increases dramatically raise production costs and squeeze profit margins. Companies like Mejuri, Pandora, and Signet Jewelers are being forced by this rapid pace to raise prices or look for new materials. For example, Mejuri, a jeweler known for selling luxury jewelry at more affordable prices, announced extensive product innovations to maintain the balance between price and quality. On the other hand, Pandora, in its Q2 financial report, admitted to a margin decline of 80 basis points.
*Past performance is not a guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate or influenced by changes in the current economic environment. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Actual results may differ materially from those expressed or implied in any forward-looking statements.
