Gold has kept onrising almost uninterruptedly for most of 2025, recording a series of newall-time highs. Since October 2022, the metal’s price has almost doubled,having risen by more than 25% in 2025 alone, hitting a fresh all-time high of$3,500 per ounce on April 22. A $4,000 price level, once dismissed as fantasy,is now openly being discussed on trading floors across the globe. Octa Brokerexamines the forces behind gold’s remarkable rally — and what might come next.

Geopolitical Tensions asthe Main Catalyst

The globalenvironment in 2025 is anything but peaceful. The wars in the Middle East andEastern Europe remain, and their long-term resolution still seems to be out ofreach. The U.S.–China relations have taken a sharp downward turn. The latestinstallment of hostilities is being acted out in tariffs: the Trumpadministration has resumed a trade war footing, with China retaliating byraising tariffs on U.S. goods to 125% from 84%. Recently, the USA admittedthat the tariffs for China could be increased up to 245%. This intensifying globaluncertainty has propelled investors toward safe-haven assets, and none are moretried-and-tested than gold. As global trade frays and economic growth outlooksdim, gold’s role as a hedge becomes more pronounced.

Monetary PolicyExpectations and Rate Cut Bets

Historically, goldtends to perform better when the interest rates are low. The current U.S.monetary policy outlook suggests a favourable environment for the preciousmetal. In response to weakening economic signals, the Federal Reserve (Fed) iswidely expected to cut interest rates at least twice in 2025. The latest LabourDepartment data revealed a surprise drop in U.S. consumer prices in March,bolstering expectations of a looser policy stance by mid-year. Marketparticipants now factor in a roughly 30% chance of a full percentage point cutby December.

However, withinflation potentially resurging due to tariffs, the Fed could be forced toreverse course. Such a move might derail gold’s momentum. Still, for now, lowerrates make non-yielding assets like gold more attractive, creating thepotential for further price gains.

Weak Dollar Boosts Gold’sAppeal

The U.S. dollar indexrecently recorded its sharpest decline since 2022, hitting newyearly lows. As Kar Yong Ang, a financial market analyst at Octa Broker,explains: ‘A weaker greenback typicallysupports gold by making it more affordable for holders of other currencies.This trend, together with the increasing uncertainty, has encouraged strongdemand, further fuelling the rally’. Indeed, the increasing demand has beenevident since the beginning of the year. In the middle of April, gold fund netinflows hit a record $80 billion year-to-date, according to BofA Global Research.

Central Bank Buying andDe-Dollarisation

Another bullish factorfor gold is the rise in structural physical demand — especially, when it comesto global central banks that increase their gold reserves at an aggressivepace. People’s Bank of China raised its gold holdings to a record level inQ1 2025, underscoring the metal’s strategic importance. This structural demandaligns with the broader BRICS-led push for de-dollarisation. Diversifying awayfrom U.S. Treasuries and the dollar, several countries are turning to gold as areliable store of value — bolstering long-term demand fundamentals.

ETF Flows Reflect Retailand Institutional Demand

The growing optimismamong investors regarding gold is also evident in exchange-traded funds (ETFs).Gold-backed ETFs experienced significant inflows in March 2025,particularly in North America. These flows indicate robust interest from bothretail investors and institutional players, further tightening the market.

Key Risks to the $4,000 Scenario

Despite the underlying bullish environment,gold may fall short of the $4,000 target and, instead, experience a significantdownward correction due to several factors:

● Inflation Surprise and Rate Reversal. Iftariffs and supply disruptions reignite inflation, central banks may be forcedto abandon dovish policies. A Fed reversal to a tightening bias couldstrengthen the dollar and exert a downward pressure on gold prices —potentially disrupting the bullish narrative.

● Geopolitical Stabilisation. A de-escalation ofglobal tensions, particularly between the U.S. and China or in Eastern Europe,could sharply reduce safe-haven demand. While this is not the base case for2025, it remains a wildcard risk that traders must consider. Indeed, XAUUSD hasalready pulled back from its recent highs after the U.S. President Donald Trumphinted at lower tariffs for China.

● Overbought Technical Conditions. Gold’s sharprally raises the likelihood of corrective pullbacks. If momentum slows,profit-taking could spark a swift and dramatic sell-off. As with any parabolicmove, volatility is inevitable: the price tends to experience short-termdowntrends before new all-time-highs (ATH). Traders with short-term strategiesshould beware of such price drops and practice risk management: avoid largetrading sums, apply stop-loss positions, and diversify their portfolio.

Is $4,000 a Fantasy or a Forecast?

A convergence ofmacroeconomic, structural, and technical factors is pushing gold into unchartedterritory. With macroeconomic uncertainty, rate cut expectations, geopoliticaltensions, and central bank demand all aligned in support, the $4,000 level is nolonger just a theoretical ceiling — it is a plausible next target. Still, thepath is unlikely to be smooth. Corrections, sentiment shifts, and externalshocks may temper the pace of the rally. However, for long-term holders, thethesis remains compelling.

About Octa

Compliance reminder: trading Contracts for Difference (CFDs) carries a high level of riskand may not be suitable for all investors. Emotional trading can increase thisrisk. Always trade within your means and understand the risks involved.

Octa is an international broker that has been providing onlinetrading services worldwide since 2011. It offers commission-free access tofinancial markets and various services used by clients from 180 countries whohave opened more than 52 million trading accounts. To help its clients reachtheir investment goals, Octa offers free educational webinars, articles, andanalytical tools.

The company isinvolved in a comprehensive network of charitable and humanitarian initiatives,including the improvement of educational infrastructure and short-notice reliefprojects supporting local communities.

Since itsfoundation, Octa has won more than 100 awards, including the 'Most ReliableBroker Global 2024' award from Global Forex Awards and the 'Best Mobile TradingPlatform 2024' award from Global Brand Magazine.