The rally in gold prices from the trough to the milestone mark of USD 4,000 per ounce (oz), reached on October 9, and is just 735 days old, according to a recent note by the World Gold Council (WGC).
he rally in gold prices from the trough to the milestone mark of USD 4,000 per ounce (oz), reached on October 9, and is just 735 days old, according to a recent note by the World Gold Council (WGC).
The yellow metal took only another seven days to breach a new record of USD 4,200/oz, marking the fastest USD 500 climb in gold’s history. Prices surged from USD 3,500/oz to USD 4,000/oz in just 36 days, far outpacing the historical average of 1,036 days for similar gains, according to WGC data.
Despite the blistering pace, the WGC noted that the current rally remains below the average duration and magnitude of past bull runs. Gold’s earlier rallies took 856 days between August 1976 and January 1980; 1,168 days between January 2007 and September 2011; and 1,162 days between December 2015 and August 2020.
Highlighting the reason behind the uptrend in gold prices this year, the report said it has been driven by robust investment demand, particularly from Western investors seeking safety amid geopolitical tensions, a weaker dollar, expectations of further US Federal Reserve rate cuts, and fears of an equity market correction.
“Continued central bank buying has also provided strong support, reinforcing positive sentiment around gold allocations,” WCG noted.
The WGC cautioned that the market could see short-term corrections. Technical indicators, such as the relative strength index (RSI) above 90 and prices trading over 20 per cent above their 200-day moving average, suggest that gold may be overbought, prompting some investors to anticipate a pullback.
“Tighter credit conditions could also trigger liquidation of high-performing assets like gold as investors seek cash,” WGC warned, adding that any easing of geopolitical risks could redirect capital toward risk-on assets.
The Council further noted that the sharp rise in gold prices could dampen consumer demand during what is typically a strong seasonal period, as strategic investors may rebalance portfolios following the rapid rally.
“Short-term volatility may arise from portfolio rebalancing, market corrections, and technical signals, while long-term resilience is underpinned by a broadening investor base, persistent policy uncertainty and a gold investment market that still has room to grow,” WGC said.