Gold Hits $3,036: What’s Next for 2025?

Gold has been treasured for centuries, yet there’s shockingly little of it.

Every ounce ever mined about 212,582 tonnes could fit into a cube just 22 meters across.

That’s only slightly more than three Olympic pools or a thin layer over a football field.

This rarity is what makes gold so valuable.

Unlike paper money, it can’t be printed at will. It doesn’t corrode, it doesn’t vanish, and it has outlived every currency in history.

When inflation spikes and markets shake, people rush to gold.

This latest price surge is no different but this time, it’s not just about fear. It’s about running out of supply.

Gold Hits $3,036

Gold hit a record $3,036 per ounce on March 21, 2025, after peaking at $3,057.21 overnight.

This price explosion isn’t just market speculation it’s a response to a growing supply crisis.

Mining output is about to peak at 3,250 metric tonnes in 2025, then decline.

Reserves are running out. Ore grades are falling.

Mines are shutting down. 

Even if every planned project moves forward, production could still drop 17% by 2030.

China, the world’s largest gold producer, mined 380 metric tonnes in 2024.

But its reserves are modest, making long-term production growth uncertain. Russia, producing 310 tonnes, faces geopolitical isolation that complicates mining expansion.

Australia, at 295 tonnes, is seeing its biggest gold deposits dwindle.

While production struggles, demand is skyrocketing.

Central banks have been on a gold-buying spree, purchasing over 1,000 tonnes annually for three straight years. 

China alone added 44 tonnes in 2024, bringing its reserves to 2,280 tonnes.

In Q4 2024, central banks bought 333 tonnes, pushing global demand to a record-breaking 4,974 tonnes for the year.

Gold’s role in technology is also expanding. Demand from the tech sector grew 7% in 2024, fueled by AI-driven advancements.

At the same time, high prices have pushed jewelry demand down 11%, as consumers hesitate to buy at these levels.

Why is Gold Surging?

This isn’t just about supply it’s about a perfect storm of global events pushing gold higher.

Geopolitical instability is a major driver.

Middle East tensions, including Israeli airstrikes in Gaza and Houthi attacks in the Red Sea, are fueling safe-haven demand. 

Meanwhile, Russia-NATO tensions and U.S.-China trade disputes are rattling markets.

The result?

Gold prices have climbed 13% year-to-date, proving once again that in times of crisis, investors rush to gold.

Monetary policy is also at play.

The Federal Reserve has turned dovish, keeping interest rates at 4.25%-4.50% while signaling two rate cuts in 2025. 

Lower rates push the 10-year Treasury yield down to 4.25%, making gold more attractive.

Models from WisdomTree suggest that a 1% drop in 10-year yields leads to a 5-7% increase in gold prices.

The weakening U.S. dollar is adding more fuel.

The dollar index (DXY) has fallen to 107, its lowest since November 2024.

A weaker dollar makes gold cheaper for international buyers, boosting demand. At the same time, inflation fears are rising.

Trump’s trade policies, including 200% tariffs on EU alcohol, are pushing consumer prices higher. 

Since January 2024, gold has surged 40%, aligning with rising inflation expectations.

Institutional investors are taking notice. Hedge funds and asset managers are piling in, with managed money net long positions in gold futures still at 300,000 contracts. 

After three years of ETF outflows totaling $58 billion from 2021 to 2023, gold ETFs are finally seeing inflows again. That’s a major shift in sentiment.

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What’s Next?

Gold’s performance over the past two decades tells a clear story.

Between 2002 and 2022, it delivered an 8.51% annual return, matching global equities while crushing bonds and emerging market debt.

Gold has even outperformed Bitcoin this year, with Bitcoin down 15% year-to-date, proving that the metal still holds its title as the ultimate store of value.

Goldman Sachs has raised its 2025 year-end target to $3,100 per ounce, up from an earlier estimate of $2,890.

Projections suggest that, under a normal scenario, gold could range from $2,700 in Q1 to $3,070 by Q4.

But if inflation stays high and geopolitical tensions worsen, a bull case scenario could push gold past $3,450 by year-end.

The biggest risks?

A delayed Federal Reserve rate cut, a sudden dollar rebound, or disruptions in central bank buying could slow the rally.

However, the long-term supply outlook remains a bigger issue.

Without new investments, global gold production could drop below 2,700 tonnes by 2030, creating an even wider supply-demand gap.

Institutional investors are already preparing. Major funds have increased gold allocations from 4% in 2020 to 8-10% today. 

As BlackRock’s Chief Investment Officer put it, “Gold is no longer just a hedge, it’s a necessity in a multipolar world.”

With supply shrinking, central banks hoarding reserves, and global uncertainty rising, this rally might be far from over. The world is waking up to gold’s value once again.