Gold’s Relentless Ascent

Gold has entered rare territory, breaking into new record highs as it’s revalued in real time. This rally isn’t driven by fear or retail speculation—it’s driven by structure. The foundations of the global monetary system are shifting, and gold is being repriced accordingly.

Why Gold Is Hitting Record Highs Now

The drivers behind gold’s surge are neither random nor fleeting. ANZ recently lifted its year-end target to US$3,800 per ounce, citing a convergence of institutional flows, persistent central bank buying, a weakening US dollar, and growing expectations of policy easing.

Central banks have become the quiet cornerstone of this rally—accumulating 400 to 500 tonnes annually, irrespective of price. This isn’t speculative capital; it’s sovereign demand.

As Deutsche Bank points out, this bull market is powered by two engines: official sector accumulation and institutional inflows via ETFs. Citi notes that gold has now “decoupled from production costs,” trading more like a monetary asset than a commodity—a rare store of value in a world of debased currencies.

Even in Australia, record prices are incentivising producers to process lower-grade ores and draw down stockpiles, highlighting the structural profitability of gold at current levels. This rally is less about price momentum and more about a repricing of trust.

The Risks Beneath the Surface

The primary risk to gold’s trajectory lies in monetary miscalculation. Should the US Federal Reserve turn unexpectedly hawkish—perhaps in response to persistent inflation—the dollar could rebound sharply, tempering gold’s advance.

Technical overextension is another factor. Gold is heavily overbought on most indicators, and any macro shock could trigger a short-term pullback. A pause in central bank buying—particularly from China, Turkey, or the Gulf states—would also remove a critical layer of demand.

Despite these risks, the structural drivers of this bull market remain intact.

Australia’s Position in the Global Gold Trade

Despite record prices, Australian production has edged lower—driven by operational constraints rather than lack of profitability. Miners are blending in up to 15% lower-grade feedstock, using high prices to extend mine life and protect margins.

This measured approach reflects an industry not chasing the rally, but preserving its leverage. With FY2025 gold exports nearing 300 tonnes, the metal is now one of Australia’s top export earners—second only to iron ore and LNG. The message from producers is clear: supply won’t be the factor that caps this market.

Where Gold Could Go from Here

Analysts remain broadly bullish, though views differ on timing and scale. The base case aligns with ANZ’s US$3,800 target by year-end, and a potential peak around US$4,000 by mid-2026.

More aggressive forecasts—from macro voices like Maloney and Rickards—envision a scenario where rate cuts exceed expectations, the US dollar weakens further, and central bank demand continues unabated. In such a case, gold could break above US$4,100, signalling the start of a longer-term revaluation.

Conversely, a hawkish Fed pivot or a strong dollar could pull gold back to US$3,200–3,400—a consolidation, not a collapse.

Positioning for the Next Phase

For investors, this is a market to accumulate—not chase. A prudent strategy is to maintain a core allocation and use dips to build exposure, rather than attempting to time peaks.

Key signals to monitor include central bank purchases, inflation data, and US monetary guidance. These are the inflection points that could drive the next breakout.

Australian investors should also consider currency dynamics—a weakening AUD amplifies local returns, making domestic bullion holdings particularly attractive. Diversifying through physical bullion, ETFs, and selective mining equities allows investors to balance upside potential with liquidity and risk.

In this cycle, gold is reasserting itself not as a speculative trade, but as a monetary anchor. As confidence in fiat systems erodes, the repricing of gold—and the rise of silver alongside it—will shape the next monetary era.