(Kitco News) - It has been another incredible week for gold. Not only did it hold its initial support at $2,800 an ounce on Monday, but it also rallied to a series of fresh record highs, ultimately touching $2,900 an ounce on Friday.
This momentum is starting to attract significant attention, and many analysts are once again discussing a $3,000 target.
At the same time, a growing chorus of gold bulls sees $3,000 as just another stepping stone in the precious metal’s upward trajectory; many are now looking at gold’s inflation-adjusted all-time high, which is around $3,420.
Gold’s all-time record high was set in January 1980 when prices hit $875 an ounce. This peak was the culmination of a nearly four-year rally that began in August 1976.
While this inflation-adjusted target may seem far-fetched to some, many analysts note that the same factors that fueled gold’s rally nearly 50 years ago are once again at play today.
Geopolitical uncertainty is surging through global financial markets as investors worry that U.S. President Donald Trump will push the world into a trade war.
Despite Trump’s campaign promises to end Russia’s war in Ukraine, there are still no signs of peace. Even when this conflict eventually ends, the divisions between allies and adversaries will persist — especially as China and the U.S. continue their struggle for global economic dominance.
This uncertainty is weighing on global growth and fueling inflation concerns. Tit-for-tat tariffs are expected to drive consumer prices higher worldwide.
For instance, South American coffee producers are already withholding their coffee beans in anticipation of supply disruptions that could push prices even higher.
Meanwhile, Canada is looking to sell its aluminum and other raw materials to Europe to avoid dependence on an unpredictable U.S. President.
The gold market reflects the growing fragmentation of the global economy; it is one asset that carries no geopolitical third-party risk, making it an essential global currency.
The biggest driver of gold remains central bank demand. Data from the World Gold Council shows that central banks purchased 1,045 tonnes of gold last year. This demand significantly exceeded expectations and marked the third consecutive year in which central banks acquired more than 1,000 tonnes.
Central bank gold purchases accounted for roughly 20% of total global demand, which reached a record high last year.
According to many analysts, this sector of the market is the biggest reason why regular investors should pay attention to gold. Central banks represent real value in the marketplace. They are not speculative investors chasing the next big trend; they are serious portfolio managers focused on preserving their nations’ wealth and purchasing power over decades.
This underlying demand is why Kathy Kriskey, Senior Commodities ETF Strategist at Invesco, described gold as a "safety blanket" that investors cling to in times of fear.
Even the world’s largest asset manager sees value in gold. Russ Koesterich, Managing Director and Portfolio Manager of BlackRock’s Global Allocation team, expects gold prices to continue rising as the yellow metal remains a crucial tool for diversification and wealth preservation.
