Gold Hits Historic $4,500/oz as Rally Accelerates

On December 25, the spot price of gold exceeded $4,500 per troy ounce for the first time in history. Since the beginning of the year, the metal has appreciated by 70%, and by 120% since the start of 2024. This surge surpassed the moderate growth expectations set by investment banks earlier in the year; for example, Bank of America had forecasted only $3,000 per ounce by the end of 2025.

Several factors drove this rally, including geopolitical instability, the process of deglobalization, and, since late summer, expectations of monetary policy easing by global regulators, particularly the Federal Reserve. As a result, the precious metal was purchased by both private and institutional investors seeking to protect their savings, as well as by central banks of developing countries looking to move away from risky currencies.

Investment bankers see no reason for the rally to stop, as all contributing factors remain active. Valuations do not appear aggressive: Goldman Sachs expects $4,900 per ounce, while Bank of America and Societe Generale project $5,000 per ounce, representing a potential growth of 8–11%.

The precious metals market witnessed a historic milestone on December 25 as the spot price of gold surpassed the $4,500 mark per troy ounce. This represents a significant acceleration in value, with the metal posting a 70% increase since the start of the current year. The momentum has been even stronger over a longer timeframe, with prices more than doubling—rising 2.2 times—since the beginning of 2024.

This performance has significantly outpaced the conservative estimates made by financial institutions just a year prior. Market analysts had anticipated a much more moderate trajectory for the yellow metal. Specifically, Bank of America had projected a price ceiling of just $3,000 per ounce by the close of 2025, a target that has been decisively shattered.

Several macroeconomic and geopolitical currents have converged to fuel this unprecedented bull run in gold. The primary catalysts identified include:

• Geopolitical instability creating uncertainty in global markets.
• The ongoing process of deglobalization, which disrupts traditional trade flows.
• Expectations of monetary policy easing by major global regulators, specifically the Federal Reserve.

These factors created a perfect storm for the asset. Beginning in late summer, anticipation of interest rate cuts shifted investor sentiment toward safe-haven assets. Consequently, demand surged from two distinct groups: private and institutional investors seeking a hedge against inflation and currency devaluation, and the central banks of developing nations diversifying their reserves away from volatile fiat currencies.

Despite the massive gains, market sentiment remains bullish. Investment bankers currently see no fundamental reasons for the rally to halt, noting that all the driving factors mentioned above continue to exert influence on the market. The current valuations are viewed by some analysts as having room to grow further rather than being overextended.

Major financial institutions have revised their targets upward to reflect the new market reality. Goldman Sachs is currently forecasting a price of $4,900 per ounce. Meanwhile, both Bank of America and Societe Generale have set targets at $5,000 per ounce. If these forecasts hold, the metal could see an additional growth of between 8% and 11% from current levels.

The surge in gold prices reflects broader shifts in the global financial landscape. As investors and nations alike seek stability in an increasingly fragmented world, bullion has reaffirmed its status as the ultimate store of value. The divergence between initial bank forecasts and actual performance highlights the volatility and unpredictability of the current economic environment.

While the rally has been sharp, the underlying demand drivers suggest that gold may continue to play a critical role in investment portfolios and national reserves moving forward. The metal's ability to hedge against both inflation and geopolitical risk remains its primary value proposition.