Gold Soars 54% in CY25, the Fastest Rally Since 1979
Gold delivered an exceptional performance in CY25, recording one of its strongest rallies in modern history. While prices fluctuated throughout the year, the overall trend was upward. As a globally accepted asset with limited supply, gold has long been trusted as a store of value during financial and geopolitical uncertainty.
Unlike paper assets, gold carries no credit risk. It cannot default, fail, or go bankrupt. This unique quality made it especially attractive in CY25, a year marked by economic instability and political stress.
A performance not seen since 1986: In Q1 CY25, gold surged above $3,100/oz, hitting a record high around $3,128.06/oz. Reuters reported bullion was on course for its strongest quarter since 1986. Compared with the Q1 CY24 LBMA average of $2,070/oz (World Gold Council data), it implies roughly a 50 percent YoY increase, setting the tone for an extraordinary year.
Fastest growth since 1979: By Q4CY25, gold surged above $4,000/oz for the first time since 1979, with Reuters reporting prices around $4,050/oz and up about 54 percent year-to-date.
Current market price: As of 3:36 AM, Thursday, 18 December, gold in the United States was trading near $4,325.30/oz, confirming sustained strength toward the end of CY25.
1. Gold Price Movements: Yearly Lows and Highs
Lowest Levels of CY25
In Q4CY24, spot gold briefly fell to around $2,570/oz, touching its lowest level since mid-September and putting it on track for one of its steepest weekly drops in over three years.
This sharp fall was driven by three key factors:
- US. election outcome: Donald Trump’s victory on 5 November strengthened the U.S. dollar. A stronger dollar makes gold more expensive for non-U.S. buyers and encourages investors to shift funds from gold into dollar assets.
- Interest rate expectations: Anticipation of higher tariffs and fiscal spending raised inflation concerns, reducing expectations of near-term Federal Reserve rate cuts. Higher interest rates supported the dollar and reduced gold’s appeal.
- Shift toward cryptocurrencies: Bitcoin surged above $90,000, attracting capital away from gold as investors chased higher short-term returns.
Despite this correction, gold quickly recovered and resumed its upward trajectory.
Key Upside Price Movements in CY25
- Q1 CY25: Reuters reported gold crossing $3,100/oz, marking its strongest Q1 since 1986.
- Q4 CY25: According to The Economic Times, gold surpassed $4,000/oz, with prices up over 54 percent, the highest annual rise since 1979.
2. Key Events Driving Gold’s Rally in CY25
Unlike typical years, CY25 saw multiple global shocks unfold simultaneously, amplifying gold’s price movements.
2.1 Central Bank Demand
Central banks played a crucial role in supporting prices.
- Since CY22, central banks have purchased over 1,000 metric tons (MT) annually, according to Reuters.
- In CY25, purchases were estimated at around 900 MT, providing strong long-term demand support.
2.2 Trade Tensions Push Gold Above $3,000/oz
Rising U.S.–China trade tensions in Q1 CY25 sparked early gains.
- The U.S. signaled new tariffs on imports from China and Europe, prompting fears of retaliation.
- Renewed trade uncertainty drove investors toward safe-haven assets, pushing gold above $3,000/oz.
2.3 Federal Reserve Signals Rate Cuts
In early CY25, the U.S. Federal Reserve indicated potential rate cuts. Lower interest rates reduce returns on cash and bonds, increasing gold’s attractiveness as a store of value. This shift in expectations provided additional upside momentum.
2.4 Geopolitical Risks Lift Gold Above $4,000
Gold crossed $4,000/oz as investors sought safety amid escalating global tensions:
- Russia–Ukraine War: Ongoing conflict disrupted energy supplies and heightened geopolitical uncertainty.
- Middle East Conflict: Fighting between Israel and Hamas, rising Iran tensions, and Red Sea shipping disruptions unsettled global trade.
- Weak European Economy: Slow growth and persistent inflation in Germany, France, and Italy deepened global economic concerns. This period reinforced gold’s role as a hedge against multiple, overlapping risks.
3. CY24 vs CY25: A Clear Step Change
CY24 Performance
- Gold gained approximately 27 percent.
- Prices ended near $2,624/oz, the best annual rise since CY10.
CY25 Performance
- Q1 CY25 average price: Around $2,860/oz, about 38 percent higher than Q1 CY24.
- Gold demand value: Increased by nearly 40 percent YoY, according to the World Gold Council.
CY25 decisively outperformed an already strong CY24.
4. Conclusion and Outlook for CY25
CY25 confirmed that gold’s strength is driven not only by fear but by structural demand and long-term confidence. Central banks continued buying 900–1,000 MT annually, while investors increased exposure through ETFs and physical holdings.
Upside Potential: According to Bloomberg, JPMorgan’s gold price forecast is at $5,200–$5,300/oz by CY26, reflecting continued confidence in the metal’s outlook.
With persistent trade tensions, U.S. policy uncertainty, rising global debt, and ongoing geopolitical conflicts, gold remains a preferred safe-haven asset.
Overall, CY25 reaffirmed gold’s role as one of the most reliable tools for wealth protection—and its importance is likely to remain strong in CY26.
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