Gold prices continue to surge, and breached $4,000 per ounce for the first time ever on 9 October. The yellow metal’s multi-year bull run is showing no signs of cooling, with analysts tipping further gains in the months to come — this week, Goldman Sachs raised its gold price target for the end of 2026, to $4,900.
There are no guarantees that gold will keep rising. But here are three reasons why it could.
1. Lasting uncertainty
Surging demand for safe-havens has driven bullion sharply higher in 2025. It’s been propelled by a range of factors including rising inflation, interest rate cuts, growing government debt, weak economic growth, and fears over US stock valuations.
Geopolitical concerns, including the volatile political landscape in the US and the potential for fresh global conflicts, have boosted the metal’s flight-to-safety appeal as well.
Some (if not all) of these uncertainties look set to endure, providing the perfect landscape for gold to thrive. This week, Kristalina Georgieva — managing director of the International Monetary Fund (IMF) — warned us to “buckle up: uncertainty is the new normal and it is here to stay“.
2. Central bank buying
It’s not just retail and institutional investors who are piling into gold. Central banks are also loading up on bullion to diversify their international reserves and to manage risk. It’s also part of a drive by many institutions to reduce their US dollar exposure.
In June, nine out of 10 central bank officials told the World Gold Council (WGC) they expect banks’ total reserves to increase over the following 12 months. In line with this trend, Andre Wameso — head of Democratic Republic of Congo’s central bank — told Reuters this week of the African country’s plan to start buying gold.
3. The drooping dollar
A steady decline in the US dollar also bodes well for gold prices looking ahead. This has already been a major catalyst for the metal in 2025, caused by growing inflation, interest rate expectations, and worries over the independence of the Federal Reserve.
The falling greenback has made it more cost-effective to buy dollar-denominated commodities like precious metals. Declining confidence in the US dollar has also indirectly benefitted gold, by encouraging investors to switch from the classic safe-haven currency into other flight-to-safety assets.
The US dollar fell at its sharpest rate for 50 years in the first half in 2025. I think there’s scope for further significant weakness.
How to profit from gold
Investors can buy physical gold like bars, coins, and jewellery to capitalise on rising prices. They can also invest in exchange-traded funds (ETFs) that track the performance of the shiny metal.
They can also purchase gold stocks, which is what I’ve personally chosen to do. I’ve done this by buying the L&G Gold Mining (LSE:AUCP) ETF, which holds a basket of metal producers.
This is a risker approach than just tracking the gold price. Gold miners’ returns can underwhelm if they experience operational problems, an ever-present danger. But my ETF holds shares in 37 different companies, which reduces this threat to my overall returns.
It’s a strategy that can lead to supersized gains, as producers’ profits often rise more sharply than the gold price during bull markets like this. While gold has gained 53% in 2025, the L&G Gold Mining ETF has gained 122%. This makes it far more appealing to me from a risk and reward standpoint.
