Africa-Press – South-Africa. The gold price surged to a new high of $3,720 an ounce this week, the highest level since 1979, underscoring its safe status for investors and central banks.
The gold price has surged over 40% since January, smashing previous records.
Robbie Proctor, an investment analyst at Anchor Capital, said multiple factors underpin the rise. Since 2022, there had been consistently strong emerging central bank gold purchases to diversify reserves away from US Treasuries.
He said the surge from late 2024 into 2025 was largely attributable to Western investors buying gold ETFs as [real inflation-adjusted] bond yields have fallen. “Geopolitical developments have certainly contributed to demand.”
Proctor said local miners had historically been leveraged performers of the gold price.
“With a largely fixed cost base, the higher price almost goes straight to the bottom line. This wasn’t the case between 2022 and 2024 when gold miners failed to keep pace with the gold price. The return of Western buyers of gold ETFs has also translated into strong demand for gold miners.”
Umar-Farooq Kagee, an investment analyst at Allan Gray, said the surge in the gold price reflects “de-dollarisation”.
“The US Federal Reserve has recommenced interest rate cuts while inflation has remained sticky, above its target levels, opening the risk of diminishing the US dollar’s purchasing power. Gold’s scarcity and the high cost of extraction prevent the kind of breakdown in monetary discipline that one has observed globally since the global financial crisis.”
He said gold miners experience a leveraged upside from the rising gold price. In the short term, their cost base is fairly agnostic to the movement in the gold price.
“Most of each $1 increase in the gold price tends to flow down to profits. We can see this in locally listed gold stocks, which have enjoyed increases in free cash flow that far exceed the rise in the gold price.”
Gold stocks, including Gold Fields, Pan African Resources and Harmony Gold Company shot up this week on the higher gold price.
Rael Demby, CEO of the South African Gold Coin Exchange and The Scoin Shop, said the US tariff policies under President Donald Trump had created economic uncertainty, leading investors to move away from traditional safe-haven assets like the dollar.
“We’re seeing strong demand for gold bullion and collectable coins like Krugerrands, with our sales up significantly this year as people turn to gold to protect against inflation and currency fluctuations.”
Demby said robust central bank purchases — especially among emerging markets — had provided a solid foundation, with more than 1,000t acquired annually since 2022, according to industry data.
“At the same time, escalating geopolitical tensions and widespread concerns over the impact of US tariff policies have shaken investor confidence in traditional safe havens like the US dollar.”
He said financial institutions were taking notice, with Goldman Sachs projecting that gold had the potential to climb as high as $4,500 if trade tensions escalated or challenges to US Federal Reserve independence intensified.
“With interest rate cuts expected from the Federal Reserve in 2025, gold’s status as a non-yielding but stable asset is only expected to strengthen. Gold remains a trusted choice for investors navigating these uncertain times,” Demby said. “Its value as a safe-haven asset continues to shine through.”
For More News And Analysis About South-Africa Follow Africa-Press
