Gold price on record course
The price of gold broke through the 4,000 dollar mark for the first time - a historic milestone and a symbol of the growing distrust in the global debt money system.
In euro terms, the price recently approached the threshold of 3,500 euros per ounce. Within a week, the price of gold rose by more than three percent in US dollars and around four percent in euros. Since the beginning of the year, this represents an increase of over 50 percent in US dollars.
The momentum is remarkable. The chart shows an almost parabolic trend, reminiscent of earlier phases of exaggeration. At around 85, the RSI is clearly overbought. The distance to the 200-day line is now also more than 25 percent. This means that the gold market has run hot in the short term - even by the standards of a bull market.
Momentum and capital flows
The latest rally is being driven primarily by momentum and massive shifts in capital. Institutional investors are shifting funds into physically backed gold ETFs. The largest fund alone, the SPDR Gold Shares (GLD), reported net capital inflows of almost five billion US dollars in two weeks. The fund's gold holdings rose to more than 1,018 tons - the highest level since 2022.
The silver market also benefited from the flight into precious metals. The iShares Silver Trust recorded an increase in holdings of 174 tons. Such movements in funds are a classic sign of institutional risk aversion - an indication that investors are focusing on crisis protection rather than returns.
Uncertainty as the main driver
The flight of capital into gold is an expression of growing global uncertainty. In the US, the government shutdown is paralyzing large parts of the administration, and many economic data are currently not being published at all. At the same time, there are increasing signs of stagflation: weaker economic data coupled with persistently high inflation.
According to a recent survey by the Federal Reserve Bank of New York, US households' short-term inflation expectations rose to 3.4% in September, while job prospects deteriorated. This exacerbates the Fed's situation. Although the market is expecting two more interest rate cuts by the end of the year - in October and December - there is still no lasting easing of inflation.
Falling interest rates are supporting the gold price because the opportunity costs of the interest-free investment are falling. At the same time, however, they reinforce the concern that monetary policy is only effective to a limited extent against structural problems.
Debt as a systemic factor
The global debt problem is also behind the gold rally. Whether in the USA, Europe or Asia - financing national budgets is becoming increasingly difficult. In the USA, the deficit is growing despite full employment. In Europe, countries such as France are struggling with rising yields and growing budgetary pressure.
The French state is in a deep government and budget crisis. Interest rates on French government bonds recently reached multi-year highs, which is also weighing on the financing conditions of other eurozone countries. The euro weakened significantly - and thus contributed to the strength of the euro gold price.
This shows once again: structurally, it is not gold that is rising, but the purchasing power of currencies that is falling. A chart that measures the euro in gold ounces clearly shows that the European single currency has continuously lost value against the precious metal in recent years. Gold thus remains the constant by which paper money systems can be measured.
Increasing geopolitical risks
In addition to macroeconomic tensions, geopolitical developments are increasing the flight into real assets. In Eastern Europe, the conflict between Russia and Ukraine continues to escalate. Reports of drones flying over NATO territory once again triggered discussions about possible reactions from the alliance.
At the same time, the geopolitical balance is shifting further towards the BRICS countries, which are increasingly striving to decouple from the dominance of the dollar. China, Russia and several new member states are working on alternatives to Western payment systems and are promoting gold as a reserve asset.
Nevertheless, there has been no new impetus for the gold price from China recently. The premium on the Shanghai gold price, which was still in double figures in the summer, has turned into a discount. The Chinese central bank reported purchases of only 20,000 ounces in September - the smallest increase in months. This indicates that Asian markets are reacting sensitively to prices and increasingly perceive the record prices as too high.
Central banks remain buyers - but more cautious
Despite record prices, many central banks are continuing their purchases. According to the latest report from the World Gold Council, numerous central banks once again increased their gold reserves in August. Bulgaria bought significant quantities for the first time in years, while Singapore and Russia reduced their reserves slightly.
China increased its holdings by 1.9 tons to 2,302 tons - the eleventh monthly increase in a row. Worldwide, official gold reserves now total around 36,360 tons. However, the buying momentum appears to be slowing. The high price and the tense budget situation of many countries are dampening the willingness to make further purchases.
In the long term, however, gold remains an anchor of stability in the global monetary system. The more geopolitical and fiscal risks increase, the more attractive it appears for countries to hold part of their reserves outside the dollar system.
Exaggeration with an announcement
As impressive as the rally looks, it is becoming increasingly speculative. Many market participants are following the trend without questioning the fundamental valuation. In the western markets, momentum traders and algorithmic strategies are dominating the picture.
From a technical perspective, the movement is overstretched - especially in euro terms. In US dollars, the first relevant support level is USD 3,850. If the price falls below this level, a consolidation to the 50-day line in the USD 3,700 range would be conceivable. In euro terms, EUR 3,290 and EUR 3,180 are considered key support levels.
A setback of 5 to 10 percent would not be unusual given the overheated situation. The decisive factor will be whether the ETF inflows continue even in the event of a correction. Only then would the trend prove to be sustainable.
Forecasts outdated
The force of the movement has surprised even the largest banks. In the spring, Goldman Sachs had forecast a gold price of USD 4,000 by mid-2026. This target has now already been reached. Other banks have also revised their expectations upwards several times - a typical sign that analysts are chasing the market.
While short-term forecasts are hardly reliable, a structurally bullish environment is emerging in the medium term. Global debt, fragile budgets and geopolitical uncertainties will further undermine confidence in paper money.
Outlook: Waiting for new impetus
Several questions will come into focus in the coming weeks:
- When will the US shutdown end and when will the latest economic data be available again?
- How is inflation developing and are further interest rate cuts expected?
- Are geopolitical tensions between Russia and NATO escalating?
- And: If the budgetary situation in the eurozone deteriorates further, possibly to the point of a new euro debt crisis?
As long as these uncertainties persist, gold is likely to remain in demand as a safe haven. However, a consolidation is overdue in the short term.
Conclusion
The record gold price rally reflects the markets' mistrust of politics and the monetary system. It is both a symptom and a reaction: to exploding debt, political instability and geopolitical risks.
But history teaches us that no rally lasts forever. The current gold boom could soon cool down - perhaps as soon as the first US data is published after the shutdown. In the long term, however, gold remains the only asset that investors and governments alike can trust when everything else is faltering.
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