Gold set to extend record-breaking run on global anxieties

By Polina Devitt

LONDON (Reuters) -Anxieties over global geopolitical and economic risks are the biggest drivers pushing gold's 54% surge this year to a record over $4,000 an ounce, with analysts seeing little to halt the rally.

The precious metal has climbed twofold over the last two years as investors have sought safety amid risks fuelled by President Donald Trump's trade tariffs, concerns about U.S. dollar strength, Federal Reserve independence, lingering inflation, Russia's war in Ukraine, and sluggish European growth.

"The gold market appears to be experiencing a 'once-in-a-generation move'," said John Meyer, an analyst at consultancy SP Angel.

SILVER, PLATINUM, PALLADIUM GAIN IN GOLD'S WAKE

Bullion is on track for the largest annual growth since the 1979 oil crisis, taking silver, platinum and palladium higher as well. [GOL/]

"The rally is unbelievable, telling us that something bad is happening and that we should be nervous," said Dan Smith, managing director of Commodity Market Analytics.

Gold purchases by central banks have also buoyed prices. Annual purchases of gold by central banks have exceeded 1,000 metric tons each year since 2022, according to consultancy Metals Focus, which expects them to buy 900 tons this year - twice the annual average of 2016-2021.

Policymakers have also supported gold prices by keeping borrowing costs low and delaying rate hikes, prompting investors to shift toward the metal as a safe store of value.

BULL RUN COULD EXTEND INTO 2026

Though every step higher has raised the prospect of a sell-off, with indicators showing the market is increasingly overbought, conquering $4,000 may open the way for the metal to extend its bull run into 2026.

Usually in a given year, one or two risk drivers move the gold price, BNP Paribas analyst David Wilson said: "But right now, everything that is a traditional gold driver is happening."

"If you're an investor, where do you put your money? If you're worried about the outlook for the U.S. economy and U.S. debt, do you want to buy that traditional safe-haven, which was the U.S. Treasuries? No, the yields on longer-dated treasuries have shown that investors are reluctant."

As the rally has progressed, new drivers have swapped positions to push prices higher, from central bank demand to accelerating inflows into the physically-backed gold exchange-traded funds in recent weeks and also demand for bars and coins.

Goldman Sachs raised its December 2026 gold price forecast on Monday to $4,900 per ounce.

"The attitude at the moment seems to be that maybe it will keep on going. Maybe right now there is no dip," BNP Paribas' Wilson said.

"What series of events has to happen to make the world take a deep breath and go actually, it's not so bad? Can we see a change in the U.S. policy on tariffs, trade, immigration? Right now, it's difficult to see what events would suddenly change sentiment about the global outlook."

(Reporting by Polina Devitt; Editing by Veronica Brown, Christian Schmollinger and Emelia Sithole-Matarise)