The start of this week saw the price of gold surge to new highs when it hit $3,958 an ounce. This makes its gain since the year began higher than 50%, its steepest annual climb since the oil shocks experienced in the 70s.
Wholesale bullion for European and UK investors also surged to €3387 and £2942 respectively, representing 2.5% and 2% increases. Gold priced in Japanese Yen also jumped to a new high of ¥19,078 a gram, driving the retail price above ¥21,000 for the first time.
These changes come as political instability in the United States, France and Japan continue, amid robust investment flows into gold-backed ETF trusts. The U.S. Senate, though split along party lines, held a vote this past week on a short-term spending bill to fund the government through November 21st. This comes after the shutdown, which went into effect on October 1st, delayed major economic releases.
Over in Japan, the new leader of the Liberal Democratic Party, Sanae Takaichi, also becomes her country’s first female prime minister.
France is also preparing to designate a new prime minister after Sébastien Lecornu tendered his resignation less than a month into his tenure. News of the resignation sent Paris’ CAC 40 tumbling 2.0% and pushed France’s 10-year bond spread over German Bunds to 0.88 points, its highest since the Eurozone debt crisis over 10 years ago.
In a note, HSBC explained that gold’s upward momentum could persist into 2026, supported by continued purchases from the official sector. The bullion bank added that institutional interest in gold as a portfolio hedge would likely also remain strong.
As gold prices near the $4000 mark, UBS has also updated its price projections, forecasting gold at $4200 an ounce by mid-next year. Strategists at the Swiss bank attribute the revised outlook to projected increases in central bank and ETF investment.
This isn’t the only bank revising its forecasts either. Goldman Sachs also predicts that the yellow metal will see its price surge to almost $5,000 an ounce, especially if just 1% of privately-owned U.S. Treasury securities shift into gold. The American investment bank warns that ongoing growth in ETF investment will only intensify the trend.
Figures from the World Gold Council show that as of Sept. 26, global gold ETF holdings totaled over 3,806 tons. This represents a valuation of $461.5 billion, which is a significant amount, though still roughly 3% below the all-time high by volume reached during the peak of the Covid-19 crisis.
As market and geopolitical conditions continue to drive up the price of gold, extraction companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) producing this precious metal are well positioned to capitalize on this momentum.
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