Gold prices are lingering just beneath their historic zenith, having shattered multiple records over the past year.

On Wednesday, continuous gold futures on the New York Mercantile Exchange ascended to an intraday pinnacle of $2,964.40 per ounce, narrowly missing the all-time high of $2,968.50 per ounce established on February 11.

Philip Newman, Managing Director and co-founder of the renowned precious metals research consultancy, Metals Focus, delves into the multifaceted catalysts propelling gold’s meteoric ascent. Below is an excerpt from the discussion, refined for conciseness and clarity.

Q: What has been the primary impetus behind gold’s rapid price escalation in 2025?

A: The predominant driver has been the looming specter of expanded tariffs, potentially extending to gold itself. This has fueled an intensified safe-haven demand, which initially stemmed from geopolitical volatility in the Middle East but has now pivoted towards apprehension over Trump’s proposed trade policies. Additionally, central banks have underpinned gold’s upward trajectory, bolstering prices through sustained acquisition over recent years, as gold offers a formidable hedge against economic uncertainties.

Q: Will central banks persist in accumulating gold at a scale sufficient to sustain price momentum?

A: Forecasting individual central bank actions is inherently complex, but in a broader sense, we anticipate that central banks will continue to be aggressive purchasers. Their sustained involvement in the market serves as a crucial stabilizing force, mitigating downside risks during liquidation phases. However, as witnessed during gold’s parabolic rise in autumn 2024, central banks temporarily curtailed their acquisitions. Should gold continue charting new record highs, a similar pause could materialize. Nevertheless, we do not interpret such a hiatus as indicative of a long-term shift; rather, we foresee continued robust purchase volumes in the foreseeable future.

Q: How significant is de-dollarization in fueling central bank demand for gold?

A: De-dollarization remains a central discourse within financial and geopolitical spheres. Although the movement predates the Russian incursion into Ukraine, the momentum has accelerated in its aftermath. There is no compelling rationale to anticipate a reversal of this trajectory; on the contrary, we expect the de-dollarization movement to persist, reinforcing gold’s strategic appeal as an alternative reserve asset.

Q: Are you bullish or bearish on gold for the remainder of the year?

A: Our outlook begins with a bullish bias, though we foresee a moderation in exuberance towards year-end. In the short term, gold appears poised for further gains. However, even in a scenario where prices retrace to the $2,500–$2,600 per ounce range, such levels would still constitute historically elevated valuations.

Metals Focus maintains expectations of at least one Federal Reserve rate cut this year, which could serve as an additional catalyst for gold to breach the $3,000 threshold. That said, such an ascent may precipitate substantial liquidations, temporarily dampening buyer momentum. Consequently, we anticipate gold concluding 2025 on a relatively softer note compared to its mid-year highs, albeit still commanding a formidable valuation.

Q: Has gold’s rally become overstretched at this juncture?

A: If gold were genuinely overstretched, we wouldn’t be projecting a short-term surge beyond $3,000 per ounce. The recent episodes of profit-taking have been relatively subdued, and a significant cohort of capital remains on standby, ready to re-enter the market upon price pullbacks. This self-reinforcing dynamic played out multiple times last year, as investors increasingly hesitated to take bearish positions against gold.

Q: From an investment standpoint, is gold or silver the superior choice at present?

A: The gold-to-silver ratio is currently elevated to an extreme degree. However, silver requires a substantive catalyst to bridge the valuation gap with gold. Persistent concerns surrounding China’s economic trajectory have weighed on silver, given its dual role as both a precious and industrial metal. Consequently, silver has underperformed relative to gold.

That being said, silver remains fundamentally well-supported—its relative lag is a function of gold’s remarkable price escalation. While the precise timing of a ratio compression remains uncertain, for those adopting a long-term horizon, silver presents a compelling value proposition in my personal assessment.