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Loaded for Bear: With $3,000 an ounce breached, the sky is the only limit for the price of gold

Loaded for Bear: With $3,000 an ounce breached, the sky is the only limit for the price of gold
Ed Stoddard
By Ed Stoddard
18 Mar 2025
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The sky seems to be the current limit for gold’s rally. We are barely two months into the second Trump administration, with 46 months to go. For gold bulls, the uncertainty and mayhem being unleashed are manna from heaven.

In 1971, the US president Richard Nixon terminated the greenback’s link to gold, ending the precious metal’s fixed rate of $35 an ounce. 

It would take until 13 March 2008 — almost 40 years — for gold to hit $1,000 an ounce. That was against the backdrop of the market mayhem unleashed by the global financial crisis. 

The $2,000 an ounce mark would take just over another decade to be reached, with gold’s price surpassing that level in August 2020 as the global economy groaned under the weight of lockdowns to contain the Covid-19 pandemic. 

Less than five years later, gold has scaled another four-digit peak of note. On Friday, 14 March 2025 it breached $3,000 an ounce for the first time. 

It begs an obvious question: Why are gold bulls running amok with no bear in sight to take a bite out of the rally? 

For starters, all of these key psychological levels — $1,000, $2,000 and now $3,000 — have been broken in the face of seething geopolitical and global economic uncertainty, which boosts gold’s status as a safe haven asset.

The $1,000 an ounce mark was reached as the global financial crisis and the “Great Recession” were raging, while the uncertainties around the Covid-19 pandemic underpinned its vault to $2,000. 

And we are now just two months into Trump 2.0, which is proving far more volatile and radical than The Donald’s first turbulent term in the White House. 

Chaos unleashed by Trump


The chaos unleashed by Trump — tariffs today, delayed the next, then bigger more beautiful tariffs — and the transparent fact that the president of the world's biggest economy is an economic illiterate is all quite simply manna from heaven for a gold bull. 

The US economy — the envy of the world under the Biden administration as growth accelerated, inflation slowed and unemployment reached record lows — may now tip into a recession as trillions of dollars in value have been wiped off US equities. 

Then there are Trump’s imperialist fantasies — the Panama Canal, Canada the 51st state, Greenland — which prompted an op-ed in The Atlantic entitled “Invading Canada is not Advisable”.

That The Atlantic feels the need to point this out underscores just how unhinged the Trump administration has become, and we ain’t seen nothing yet. 

Just three months ago, talk of the US annexing Canada was inconceivable — but then, so were the prospects that the US economy might be on the verge of a recession.

Then there is abandonment of Ukraine, the hostility toward Europe, the unraveling of Nato, and Elon Musk’s frenzied gutting of the US government — it is all cascading into an avalanche of uncertainty that is making many investment decisions akin to rolling the dice. 

As my colleague Tim Cohen noted in his most recent After The Bell column: “The fact is that uncertainty is a turnoff.” 

That is certainly the case for the equities, bond, and forex markets. 

But gold is often a glittering exception on this front: uncertainty is a turn on, not a turnoff. 

The Economist Intelligence Unit has been compiling a World Uncertainty Index since 2008. 

If you compare its latest graphic up until February 2025 with the World Gold Council’s graphic on the spot price of gold per ounce in dollars over the same period, it’s striking to see the overall correlation between the two.





Source: Economist Intelligence Unit, WUI

It’s not always the case that they precisely reflect together, but the trend is fairly clear. And since September of last year both have been soaring almost in lockstep. 

The World Uncertainty Index has since September 2024 been on a trajectory that is almost straight up, and looks set this year to exceed its record peak set in May of 2020 — in short, by its calculations, the world is headed for record levels of uncertainty. 

It’s no coincidence that the gold price is also in record territory.

Other factors, it must be said, have also played a role in gold’s rapid ascent from $2,000 an ounce to $3,000. Emerging market central bank purchases of gold in a bid to reduce reliance on the US dollar as a reserve currency have certainly been a key driver of the precious metal’s performance. 

The global surge in inflation in the wake of the pandemic added to the froth as gold is also seen as a hedge against inflation. 

On that score, Trump’s tariff tantrums and unfolding trade wars are seen as inflationary. 

I also recently pointed out in this column that the US far right has long been obsessed with gold, and so a key part of Trump’s political base is glowing and no doubt gloating over its record run. 

Trump and Musk have even expressed doubt about the gold reserves in Fort Knox, suggesting that perhaps they have been stolen — a preposterous notion that would light a SpaceX rocket under the price if there were any grounds for such suspicions. 

Forecasts constantly upgraded


Forecasts for gold’s price are constantly being upgraded. Goldman Sachs, for example, now sees it reaching $3,100 an ounce by the end of this year, significantly higher than its previous projection of $2,890. 

That forecast will probably be revised upward again. Gold market analysts are busy beavers these days. 

The bottom line is that the sky seems to be the current limit for gold’s rally. We are barely two months into the second Trump administration, with 46 months to go! 

It took gold about 4.5 years to go from $2,000 an ounce to $3,000. Conceivably it could reach $4,000 an ounce much faster than that. 

It's also important to point out that each new $1,000 mark that is reached is a decline in relative percentage terms. 

The almost four decades it took to get to $1,000 an ounce from $35 an ounce represented an almost 30-fold increase. The more-than-a-decade it took to reach $2,000 was a doubling of the price, and the move to $3,000 in the space of 4.5 years was a 50% rise. 

The next four-digit hurdle to $4,000 an ounce will be an increase of a third over current levels. 

This goes a long way toward explaining the accelerating pace of gold’s ascent between each new $1,000 peak. 

Still, it remains a remarkable and dizzying run. 

A return to relative “normality” would probably burst that bubble. But the one thing that is certain is that the “new normal” of instability, uncertainty and lunacy will be with us for quite some time. DM

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