Gold prices hit $3,237 amid de-dollarisation and fiscal risks

Gold prices have surged to a record $3,237 per ounce as of April 13, 2025, marking a 36% increase over the past year.

This historic rally is driven by central bank acquisitions, geopolitical instability, and shifting monetary policies, underscoring gold's role as a safe-haven asset during economic uncertainty.

Central banks have been key players in this trend, with purchases exceeding 1,000 tonnes in 2024 for the third consecutive year.

The People’s Bank of China resumed gold buying late last year, adding 15 tonnes in November and December.

Poland also increased its reserves, with gold now constituting 20% of its total holdings.

Analysts attribute this surge to global efforts to reduce reliance on the U.S. dollar following Western sanctions on Russia in 2022.

These sanctions prompted a fivefold rise in central bank demand for gold.

Geopolitical tensions have further fueled gold’s appeal.

Escalating trade disputes between the U.S. and China, coupled with economic fallout from the Ukraine-Russia conflict, have reinforced gold’s status as a reliable store of value.

Additionally, anticipated Federal Reserve interest rate cuts have lowered the opportunity cost of holding non-yielding assets like gold.

UBS Global predicts that declining interest rates could redirect $6 trillion from money market funds into gold-backed ETFs.

Consumer demand has also surged in Asia due to policy reforms.

India reduced gold import duties from 15% to 6%, boosting local consumption.

Meanwhile, China’s economic stimulus measures have amplified retail investment in the precious metal.

APAC gold ETFs grew significantly, attracting over $23 billion since their inception

Despite bullish forecasts, some analysts caution about potential supply risks.

Increased mining output and recycling could lead to price corrections of up to 40%.

Gold is still a preferred asset during times of inflation and economic instability, nevertheless, because of its inherent qualities of scarcity, durability, and universal acceptability.