Gold price exceeds $4000 as investors question the status quo

Gold's relentless rally has entered uncharted territory. Overnight, the spot price surpassed $4,000 an ounce for the first time, reaching $4,039, before stabilizing—against a strengthening dollar and renewed caution from the Federal Reserve about the pace of future interest rate cuts. This milestone caps a year-long rally that has reshaped the market's understanding of the factors driving gold prices—and perhaps even what investors now consider "safe.".

• Gold's relentless rally entered uncharted territory after the spot price in Asia surpassed $4,000 an ounce for the first time.
• The move above $4,000 isn't simply a result of interest rate expectations or a weakening dollar. Rather, it reflects a deeper shift in investor psychology and global capital flows.
• Year-to-date gains are currently close to 52%, while silver and platinum have seen gains of 64% and 86%, respectively. Palladium, though less popular, has gained almost 50%.

A rally born of distrust

Ole Hansen, Head of Commodity Strategy at Saxo Bank, points out in his analysis that the break above USD 4,000 is not solely due to expectations regarding interest rates or a weakening dollar. Rather, it reflects a deeper shift in investor psychology and global capital flows. In an increasingly fragmented world, the West's weaponization of markets, payment systems, and reserve assets has eroded confidence in traditional safe-haven assets like the U.S. dollar and Treasury bonds. Sanctions, asset seizures, and concerns about the stability of public finances have led investors—both institutional and sovereign—to seek tangible assets outside the financial system.

This decline in confidence has been visible since 2022, when Western sanctions froze the reserves of the Russian central bank and China began quietly increasing its gold holdings. Since then, central banks have been adding more than 1,000 tons of gold a year to their reserves, the fastest pace on record, and wealthy investors and institutional investors have followed suit, reinvesting in physical gold and gold-backed ETFs..

As a result, the market is no longer dominated by short-term speculative capital reacting to changes in real interest rates, but by a persistent structural demand for security. The correlation that once defined the inverse relationship between gold and US real yields has weakened significantly, underscoring the extent to which other factors—political, fiscal, and strategic—have a significant impact.

Breaking the old rules

For decades gold It was treated as a mirror image of real interest rates in the US. When inflation-adjusted yields rose, gold fell; when they fell, gold appreciated. The logic was simple: the metal offers no yield, therefore it cannot compete with interest-bearing assets. This pattern began to break down in 2022, when the Federal Reserve's strong monetary tightening failed to break gold's resilience.

Meanwhile, the federal funds rate rose 525 basis points in just 17 months, but gold refused to budge. Central bank purchases and demand from China offset traditional selling driven by interest rate changesIn late 2022, repeated attempts to push the price below $1,615 failed, paving the way for a rebound that culminated in March 2024, when the price surpassed $2,075—a level that had been a three-year high. After crossing this level, the rally accelerated, bolstered by the inflow of new funds from both institutional and retail investors.

Gold hasn't lost any value since then. Year-to-date gains are now nearly 52%, while silver and platinum have seen gains of 64% and 86%, respectively. Palladium, though less popular, has gained almost 50%. This market movement indicates something bigger than just a rise in the price of a single commodity. This marks a shift in the trend where investors are starting to prefer tangible assets, such as precious metals, as a way to store value.This means a broad rotation of investments into various precious metals, not just gold.

The China Effect: One-Way Flow

China's role was crucial. As real estate prices fell, Chinese households began seeking alternative assets for the first time in generations. Gold became the preferred instrument, bolstered by state media campaigns promoting its role as a safe-haven investment. This dynamic is reinforced by the structure of the Chinese gold market: once gold is imported, it cannot be re-exported.The result is a one-way flow – the absorption of global supply, which tightens international markets and limits downward pressure.

Tomorrow's reopening of the Shanghai Futures Exchange after the Golden Week holidays will be another test of sentiment. Futures contracts are expected to open with a gain of around 6 percent, which could provide fresh impetus to global trade. The extent to which Chinese investors follow the price rise will help determine whether the current rally will maintain momentum or face a short-term pause.

Fed Independence and Fiscal Uncertainty

Beyond capital flows, politics has become a key supporting factor. Concerns about the Federal Reserve's independence ahead of the 2026 US midterm elections, combined with prolonged government paralysis and a growing fiscal deficit, have led investors to question Washington's ability to manage its balance sheet. The United States currently spends more on interest payments than on defense—a statistic that reinforces the appeal of holding assets that carry no counterparty risk.

The gold rally has therefore become a reflection of the weakening confidence in the old financial order.For decades, investors treated US Treasuries as a global risk-free benchmark. Today, the market's message is more subtle: "risk-free" and "trust-free" are no longer synonymous.

Underrepresented in portfolios

From a technical perspective, gold is overvalued. The monthly Relative Strength Index (RSI) has crossed the 90-level mark for the first time since the 1980s, suggesting short-term overheating. Resistance is expected in the $4,100-$4,150 range, where some profit-taking could occur. However, structurally, gold remains underrepresented in portfolios. In major institutional portfolios, gold allocations are still near multi-year lows compared to stocks and bonds.

This imbalance leaves room for further capital inflows, especially if central banks or large asset managers perceive recent bond and currency volatility as a sign of systemic instability. In this sense, a tactical correction of $200–$300 would be healthy and would represent an opportunity for new capital inflows, rather than signaling the end of the bull market.

Silver, Platinum, and Catch-Up Trade

While gold grabs headlines, other precious metals are quietly gaining momentum. Silver, often described as gold on steroids, has lagged somewhat but is up 64% year to date. Investors now view the 2011 record of nearly $50 an ounce as the next major targetPlatinum's 86% rise this year reflects both a reduction in supply and its appeal as a cheaper alternative to gold. The gold-to-platinum ratio has fallen sharply from 3,5 in April to a 10-year average of around 2,7, suggesting more room for normalization if investor rotation continues.

Pallad, which has lagged for years after overinvesting in automotive catalytic converters, is showing signs of stabilizing. Its 7,8% gain last week was the strongest in the entire complex, though it still remains well below its 2021 highs.

Perspectives: Dynamics Meets Paradigm Shift

The future likely will be a combination of tactical volatility and structural strength. A consolidation phase near $3,800-$3,900 would ease overbought conditions without altering the long-term uptrend. The key to maintaining the momentum will be further central bank purchases, the stability of Chinese imports and a steady inflow of funds into ETFs..

Beyond short-term price movements, a more important question is whether gold's rise signals a lasting shift in the balance of power in the financial market. If investors increasingly perceive the political and financial systems as interconnected—and potentially vulnerable—the case for owning unencumbered real assets will become stronger.

The rise in gold prices above $4,000 could therefore symbolize more than just another cyclical bull market.It may signal a collective reassessment of notions of trust, sovereignty, and what "security" truly means. In this sense, the market is not only questioning the old order—it may already be pricing in the new.

"In the face of profound changes in the global financial system, savvy investors, instead of relying solely on a single asset, are seeking a wide range of safe havens—from gold and platinum to silver and palladium. These changes demonstrate that today's "safe haven" assets are no longer just those traditionally considered stable, but also those that respond to new threats and shifting geopolitical dynamics. Striving for diversification is now a key way to manage risk in an increasingly unpredictable financial world." Mowi Alexander Mrozek, Key Account Manager for the CEE region at Saxo Bank.

About the Author

Ole Hansen, head of department of commodity market strategy, Saxo Bank. Djoined a group Saxo Bank in 2008. Focuses on providing strategies and analyzes of global commodity markets identified by foundations, market sentiment and technical development. Hansen is the author of the weekly update of the situation on the goods market and also provides customers with opinions on trading goods under the #SaxoStrats brand. He regularly cooperates with both television and printed media, including CNBC, Bloomberg, Reuters, Wall Street Journal, Financial Times and Telegraph.