The price of gold has reached a new all-time high of over $3,400 per ounce, with the rally gaining momentum at the beginning of the week on April 21, 2025. This increase reflects a combination of market factors that could have both short-term and structural impacts on investment decisions.
Drivers of the Rally
- Weak US Dollar: The USD fell to a two-year low (since April 2022), influenced by recession fears and speculation about an impending interest rate cut cycle by the Federal Reserve.
- Trade Nervousness: Trade conflicts and protectionist announcements – particularly by US politics – are fueling demand for gold as a safe haven.
- Monetary Policy Expectations: The expectation of interest rate cuts reduces opportunity costs for non-interest bearing assets like gold and increases its attractiveness over interest-bearing investments.
Market Reactions and Risks
- Bitcoin Correlation: Alongside the rise in gold, Bitcoin has recovered to around $87,000, indicating a broader flight into alternative assets.
- Technical Warning Signals: Overbought conditions in the daily chart could favor short-term corrections, as previous consolidations around $3,330–$3,358 have shown.
Long-Term Implications for Investors
Gold continues to serve as a central risk mitigator in portfolios, particularly in the context of:
- Stagflation Concerns (despite the absence of clear signals according to analysts)
- Geopolitical Stress (trade wars, currency conflicts)
- Systemic Risks in the Banking Sector or Government Bonds
The current momentum underscores the role of the precious metal as “insurance” against unforeseen shocks, although investors should proceed selectively – for example, through physical holdings or ETFs with low cost ratios.