Gold ascends, but geometry reminds us: not linearly
As gold sprints past $3,500, is there still room to shine?
Right—so gold’s been on a bit of a tear, hasn’t it? The yellow metal has punched clean through the $3,500 ceiling, triggering a flurry of hastily scribbled price target upgrades and no small amount of hand-wringing in the analyst community. Goldman Sachs now sees $3,700 by year-end—with an upside flirtation toward $4,500—while UBS is settling in at a more restrained $3,500. But after briefly kissing $3,500, gold has cooled to around $3,330—a reminder that even the brightest rallies need to catch their breath. But here’s the real question: has gold become too hot to handle, or are we still in the early innings of something much bigger?
Gold’s Not Just Glitter—It’s Geometry
I originally forecasted a 2025 trading range between $3,200 and $3,500, which, at the time, felt almost daring. But this rally has moved like a runaway tram. With fundamentals still in place—and then some—I’m now revising that target towards $3,900 by year-end. The catalyst? A perfect storm of macro drivers colliding with structural shifts in global finance.
And here’s the kicker: this isn’t a typical momentum run driven by short-term inflation fear or dollar weakness. It’s something deeper. Central banks bought over 1,100 tonnes of gold in 2023 and have carried on hoarding with gusto into Q1 2025. This isn’t mere diversification—it’s monetary rebellion in slow motion. They're not just storing value; they’re rewriting the rules of reserve management.
ETF Euphoria Meets Jewellery Fatigue
One detail flying under most radars? While ETF inflows have ballooned—up 47% year-on-year—physical demand from traditional powerhouses like India and China has softened. Jewellery demand dropped 12% in India and 8% in China during Q1. Industrial demand has ticked lower too, down 5.3% as cost-conscious manufacturers look elsewhere.
This bifurcation raises an eyebrow. If sentiment flips or rates suddenly spike, those same ETFs could become a revolving door. So while gold feels unstoppable, it’s skating on a thinner layer of fundamental ice than some might assume.
A Recession Hedge—or a Hedgehog in Disguise?
Let’s talk about the looming ‘R’ word. If a recession does rear its head, history would suggest gold is your go-to bunker. But not all downturns are created equal. Today’s setup—with modest real yields, a surprisingly calm VIX, and equity markets still (somehow) showing teeth—feels more like a late-cycle wobble than full-blown panic.
Gold’s correlation with fear gauges has been… quirky of late. The VIX remains subdued, even as bullion has ripped higher. That divergence points to non-traditional buyers—possibly institutional allocators repositioning for a post-dollar paradigm, not just nervous retail punters chasing headlines.
Miners finally catching up—but can they keep the pace?
The Best Gold Might Still Be Underground
If you ask me, the juicier play might not be the metal—it’s the miners. Major producers are trading at just 16.5x forward earnings while posting margins north of 23%. In other words, they’re making out like bandits and the market hasn’t caught up. They offer a yield, leverage to the gold price, and—crucially—a way to get gold exposure without buying into a potential top.
Here’s an insight you won’t hear on most trading desks: in the last three major gold bull runs, mining equities lagged early—and then dramatically outperformed once sentiment turned euphoric. We're seeing signs that the lag may be narrowing. When the narrative shifts from safety to speculation, they could be the real winners.
Real gold. Digital dreams. Somewhere between lies the opportunity
Final Thoughts: Shine On, With Caution
Is gold overpriced at $3,500? Not necessarily—but it is crowded. It’s been fuelled by powerful, long-term trends, yet turbocharged by shorter-term enthusiasm. That makes it vulnerable to corrections, especially if real rates turn or ETF demand wanes.
Still, I’m not reaching for the sell button just yet. My revised year-end outlook sits closer to $3,900, underpinned by persistent central bank buying, geopolitical flux, and a subtle re-architecting of global monetary trust.
The smarter strategy now? Wait for the pullbacks. Don’t chase the sparkle at its brightest. Build your position patiently. And if you’re feeling adventurous, give the miners a look—they might just be the golden ticket hiding in plain sight.
As ever, when gold dominates cocktail conversations, it might be time to step back—but don’t stray too far. This bull has more than just bling; it’s got brains, too.
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