Gold’s New Frontier: what does it mean for Global Markets?

In April 2025, gold prices surged to an all-time high of US$3,500 per ounce. Against a backdrop of unpredictable US economic policy, investors turned en masse to the traditionally secure asset class. In Natixis CIB’s latest webinar, Bernard Dahdah, Metals & Mining Analyst, Adam Hendley, Head of Metals & Mining Industry Group and Priyanka Iyer, Head of Commodities Sales & Structuring, Asia Pacific, examine the drivers behind this price peak, its implications for global markets and the road ahead.

Gold has emerged as a barometer of global economic anxiety and changing power dynamics. Despite recent cooling from record highs of $3,500 per ounce, gold continues its upward trajectory amid shifting global dynamics, de-dollarisation trends, and political uncertainties reshaping traditional market correlations.

From shifting alliances in China and Russia to inflationary pressures and political instability in the US, the forces shaping gold markets are deeply interconnected. For gold-importing countries and industries exposed to its price volatility, this changing landscape poses serious implications.

The catalyst for gold’s dramatic rise was a fresh wave of protectionist US policy. Donald Trump’s announcement of sweeping global tariffs, including a 145% tariff on Chinese goods, sparked market panic. Simultaneously, he launched a barrage of attacks on Federal Reserve (Fed) Chair Jerome Powell, eroding investor confidence.

At the height of the uncertainty, the price of gold reflected a worst-case scenario layered over existing concerns about inflation and slowing global growth. In response, investors rushed to secure physical gold, with COMEX warehouses at one point holding enough to cover five years of US consumption.

Following a delay in the implementation of tariffs, gold prices have retreated by 6%. The outflows from US inventories signalled a return to more organic demand patterns in other regions, however, the episode reinforced gold’s status as the go-to asset during times of policy turbulence.

Traditionally, there has been a negative correlation between the price of gold and US treasury yields, with both seen as safe-haven assets. However, gold prices continued to climb despite rising yields, marking a decoupling from historic norms. What changed?

On the day of the US$3,500 market pricing, US money market funds recorded an outflow of US$125 billion – the largest since the 2008 financial crash –  as investors grew uneasy about the US economic trajectory. With gold increasingly seen as the only safe-haven asset, the US’s unpredictable agenda is changing the age-old correlation.

Geopolitical shifts have reinforced this trend. Sanctions imposed on Russia following the invasion of Ukraine prompted several central banks, especially those less aligned with the West, to accelerate the de-dollarisation of their FX assets, turning instead to gold inflows. Between June 2013 and June 2022, central banks added an average of 125 tonnes of gold per quarter. Since then, the pace has more than doubled to 260 tonnes.

China has also been instrumental in supporting gold prices. Consumer and retail demand remains robust, with local premiums hitting a record high of US$135 per ounce, before settling now at US$62, still far above the historical average of US$5. Furthermore, around the time of the gold price peak, Chinese physically backed ETFs saw inflows of approximately five billion Yuan, representing a 40-fold increase over typical monthly averages in recent years.

China’s actions will be critical in determining gold’s trajectory, with high demand continuing to boost prices. China’s insurance companies are now permitted to participate in the gold market, with four large operators now set up and trading on the Shanghai Gold Exchange (SGE).

If the Chinese government were to escalate tensions by selling US treasury bonds, it could further catalyse the flow out of the dollar and into gold. With Chinese demand and financial positioning so influential, the country’s actions remain critical in shaping the metal’s trajectory.

What does this mean for global markets? Countries and gold-exposed sectors alike are readjusting their outlook in the wake of higher prices. India, one of the world’s largest gold importers, has been one of the most affected by the uptick in prices. Demand there is highly price-sensitive, and the recent surge has priced out many small-scale retail buyers, leaving mostly investors and big-ticket buyers in the market.

The Reserve Bank of India has also been more cautious with increasing its gold holdings compared to other central banks. While seasonal factors are relevant, with demand set to grow around key festivals and the wedding season, the overall picture is one of decreased demand in 2025.

At the same time, the gold mining industry is reshaping across the board with producers looking to capitalise on higher prices. While they have typically taken a bullish stance by avoiding hedging to maintain full exposure to rising prices, since mid-2024, many have shifted strategies, using active hedging to safeguard a percentage of revenues amid increased volatility.

Higher prices have also stoked the appetite for acquisitions. In 2023 and 2024, gold mining M&A made up 40-50% of total deal value in the entire metals and mining sector. With high valuations, companies are leveraging equity-heavy scrip deals over cash. While recent investor preference focused on dividends, there is renewed interest in development stories in equity markets, exemplified by Northern Star’s AU$ 5 billion acquisition of De Grey in Australia.

Despite a degree of price normalisation since the cooling of Trump’s tariff agenda, gold prices are set for continued growth. Natixis CIB analysts expect gold prices to average at US$3,200 per ounce for 2025 and US$3,360 for 2026, with rate cuts at the end of this year likely to push up prices.

In the longer term, prices could return to the US$3,500 mark – or even supersede it, potentially reaching US$4,000. With central banks continuing their historic buying spree, Chinese demand remaining strong, and US fiscal policy unpredictable, gold appears poised for sustained strength through 2025 and beyond.

For investors and market participants, this new gold landscape demands fresh strategies. The gold market is not just a safe haven but a reflection of the shifting balance of global economic power.