Gold has surged above $2,870 per ounce, setting a new all-time high as central banks ramp up purchases and inflation fears grow.

The yellow metal has gained nearly 10% since January, marking its fastest rise since 1980 and fueling speculation about a new gold era.

Investor demand for safe-haven assets has intensified, driven by geopolitical tensions, deglobalization trends, and US trade tariffs under Donald Trump’s administration.

Analysts attribute gold’s unrelenting climb to a perfect storm of macroeconomic factors, resembling past financial crises.

Otavio Costa, macro strategist at Crescat Capital, says today’s economic landscape reflects the debt burden of the 1940s and inflationary pressures of the 1970s.

Stock markets have also reached extreme valuations, reminiscent of the speculative bubbles of the 1920s and 1990s.

As the US fiscal deficit widens and G7 nations push for local manufacturing, gold is increasingly viewed as a hedge against financial instability.

A key force behind gold’s bullish momentum is massive central bank demand, with over 1,000 tonnes purchased for the third consecutive year.

In Q4 2024 alone, central banks accelerated buying, adding 333 tonnes, according to the World Gold Council.

Goldman Sachs analysts report that global central bank gold demand has surged fivefold since Russia’s asset freeze in 2022, reflecting fears of financial sanctions.

Meanwhile, trade conflicts are adding to gold’s appeal. Trump’s new 10% tariff on Chinese imports, implemented on February 4, triggered retaliatory measures from China.

Goldman Sachs economist Jan Hatzius expects these tensions to worsen, potentially adding 20% tariffs on Chinese imports and new duties on European cars.

Is London Running Out of Gold?

Gold’s price surge has caused disruptions in the London gold market, with traders scrambling to secure bullion as shipments to the US increase.

The Bank of England has reported withdrawal delays of up to four weeks, far longer than the usual processing time.

However, Metals Daily CEO Ross Norman dismissed shortage concerns, attributing delays to logistical reshuffling rather than a fundamental supply issue.

Swiss refineries are processing London’s 400-ounce gold bars into smaller kilobars, preferred by US buyers, causing temporary bottlenecks.

Despite recent transfers, London still holds 8,710 tonnes of gold, with only 435 tonnes moving to New York—a small fraction of total reserves.

Could Silver Be the Next Big Trade?

As gold dominates headlines, analysts believe silver may offer even greater upside due to its industrial applications.

Unlike gold, silver behaves as both a precious metal and an industrial commodity, benefiting from rising global manufacturing activity.

Callum Thomas, head of Topdown Charts, argues that silver is undervalued and could see strong macroeconomic tailwinds in 2025.

With gold still climbing and investors increasingly bullish, the metal’s rally appears far from over. Whether this signals a new gold rush or a temporary surge remains uncertain, but demand shows no signs of slowing.