Why Gold Prices May Be Poised for Another Surge

Gold has spent the past four months in a relatively narrow trading range, fluctuating between roughly US$3,300 and US$3,400 per ounce. Following a sharp rally of around 70 per cent from late 2023 to its April 2025 peak, this period of sideways movement is not surprising. But the key question for investors is: Where does gold go from here? Has the rally run its course, or is this simply a pause before the next upward move?

We believe it’s the latter.

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One of the most notable features of gold’s recent rally was that it occurred despite many traditional market indicators suggesting otherwise. That resilience is exactly why we see more room for gold to climb. Now, those conventional drivers—real interest rates, inflation, and the U.S. dollar—may begin aligning in gold’s favor, just as global uncertainty remains high and central bank demand continues to grow.

To put this into perspective, gold surged to record levels above US$3,400 even while real yields on 10-year U.S. Treasuries exceeded 2 per cent—territory not seen since before the 2008 financial crisis. At the same time, the U.S. dollar index climbed toward a multidecade high of 110 earlier this year. Historically, both rising real yields and a strong dollar have been headwinds for gold. Yet, the metal pushed higher anyway.

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This price resilience has largely been fueled by unprecedented central bank demand and a backdrop of geopolitical and economic instability. Between Q1 2022 and Q2 2025, central banks purchased over 3,600 tonnes of gold—more than twice the volume acquired in the same period prior (1,700 tonnes).

The influence of this buying activity can be quantified through valuation models. A simple regression that incorporates inflation, real interest rates, and the U.S. dollar explains about 84 per cent (R-squared = 0.84) of gold price movements historically, highlighting the significant impact of these core variables. With the macro environment increasingly supportive, and central bank demand unlikely to wane, the conditions appear ripe for gold to embark on its next leg higher.