From rally to reality: Gold, the Gold business, and future of Yellow Metal

GOLD has entered a historic rally in 2025, driven by a mix of geopolitics, expectations of lower policy rates, record central-bank buying, ETF inflows and de-dollarisation.

- By A.G.S. Swaminathan Sharma

Analysts offer scenario ranges (many now price gold well above $4,000/oz and some see $4,400-4,600/oz by mid-2026), but outcomes depend on real interest rates, Fed policy, and geopolitical shocks. For gold merchants the immediate priorities are liquidity, risk controls, and trusted sourcing. For the general public—especially in gold-centric cultures like Sri Lanka and India—the prudent moves are to protect purchasing power through staged purchases, diversify savings, and be very careful with leverage. Below is a detailed, publication-ready article with data-backed drivers, scenarios and practical strategies.

1. The current picture — what's happening now

In 2025, gold has shattered previous ceilings and surged to record highs, rapidly crossing the $4,000 per ounce mark. This move is not a one-off spike but the result of several concurrent forces: geopolitical tensions (notably US-China and other global flashpoints), broad expectations of future interest-rate cuts in the US (which reduce real yields), sustained central-bank purchases and strong investor (ETF) inflows. These combined factors have created both a demand surge and a scarcity mindset among buyers.

2. Why gold is rising —the key drivers explained

2.1 Falling real interest rates and rate-cut expectations

Gold does not pay interest; its relative attractiveness rises when real yields (nominal rates minus inflation) fall or move negative. As markets price in Fed rate cuts, the opportunity cost of holding bullion declines — supporting higher gold prices.

2.2 Geopolitical risk and safe-haven demand