Gold above $5,000: Why the bull market isn’t done yet

Gold breaking above $5,000 an ounce has done more than smash a psychological level - it has rendered much of Wall Street’s forecasting obsolete, according to analysts. Prices surged to a record near $5,600 this week, extending gains of more than 10% in days and over 27% this year, following a 64% rally in 2025. Silver has followed closely, climbing towards $120 an ounce as investors seek cheaper exposure to the same forces driving gold.

What makes this rally stand out is not just its speed, but its foundation. Demand is accelerating across central banks, institutions and retail investors, while supply remains stubbornly constrained. With geopolitical risk, sovereign debt concerns and reserve diversification converging, gold’s surge raises a larger question: is this the late stage of a cycle - or the beginning of a structural repricing?

What’s driving Gold’s surge?

Gold’s price action is best explained by what hasn’t changed. Supply growth remains slow and predictable, expanding by roughly 1–2% a year. Higher prices do little to unlock new production, as mine development can take years, and often decades. When gold rallies sharply, it is almost always demand - not supply - doing the work.

That demand has shifted decisively. Central banks, once persistent sellers, have become aggressive buyers. Annual purchases exceeded 1,000 tonnes in both 2024 and 2025, more than double the long-term average. 

The freezing of Russia’s foreign exchange reserves marked a turning point, underscoring the vulnerability of fiat-based reserves and reinforcing gold’s appeal as an asset with no counterparty risk.

Investment demand has amplified the move. After years of ETF outflows, gold-backed funds saw inflows in 2025, surpassing those seen during the 2008 financial crisis and approaching pandemic-era extremes. At the same time, physical markets have tightened, with strong retail demand reported across Asia as buyers respond to visible scarcity rather than speculative momentum.

Why it matters

Gold’s rise above $5,000 is not just a commodity story - it reflects a deeper shift in how investors perceive risk. Confidence in traditional safe assets, particularly government bonds, has weakened as debt levels rise and real yields struggle to keep pace with inflation and fiscal uncertainty. The idea of “risk-free” assets is being quietly re-evaluated.

This has changed gold’s role in portfolios. “Gold is no longer just a crisis hedge or an inflation hedge; it is increasingly viewed as a neutral and reliable store of value across a wide range of macro regimes,” OCBC analysts noted recently. That reframing helps explain why pullbacks have been brief and shallow, even as prices enter uncharted territory.

Impact on markets and investors

The rally has triggered a feedback loop across precious metals. As gold prices rise, silver has attracted investors priced out of the yellow metal. Spot silver climbed above $117 this week after briefly touching a record near $119, gaining more than 60% this year. Analysts at Standard Chartered expect another market deficit in 2026, citing tight above-ground stocks as the key constraint.

Gold’s strength has also persisted despite headwinds that would normally cap gains. The Federal Reserve held interest rates steady this week, and upbeat earnings from major US technology firms supported the dollar and risk assets. Yet gold remained elevated, signalling that monetary policy is no longer the dominant driver.

Institutional behaviour reinforces that view. Crypto-focused investment groups have announced plans to allocate up to 15% of portfolios to physical gold, blending digital and traditional hedges against currency debasement. The flow into gold is increasingly defensive and strategic, not speculative.

Expert outlook

The rally's pace suggests volatility lies ahead. Analysts warn that gold’s parabolic ascent increases the risk of near-term pullbacks as positioning becomes stretched. However, most expect any correction to be viewed as an opportunity rather than a reversal, given the strength of underlying demand.

Looking further out, historical comparisons offer perspective. During the late 1970s, gold’s strongest gains came near the end of the cycle, with prices rising over 120% in a single year. When today’s bull market is overlaid on that period on a logarithmic scale, the alignment suggests a potential range of $8,700–$9,000 before the end of 2026. That is not a prediction, but a scenario grounded in persistent demand growth and structurally limited supply (Source: Reuters analysis, January 2026).

Key takeaway

Gold above $5,000 is not a sign the rally is exhausted - it is evidence that older valuation frameworks no longer apply. Demand from central banks and investors continues to overwhelm constrained supply, while confidence in fiat-based assets erodes. Volatility is likely, but the forces driving gold higher remain structural and global. The real test now is whether those pressures intensify as markets move deeper into 2026.

Gold technical outlook

Gold has accelerated further into price discovery, extending to new highs above the US$5,500 area and continuing to trade along the upper Bollinger Band. The Bollinger Bands remain widely expanded, highlighting sustained volatility and persistent directional momentum following the latest surge. 

Momentum indicators show extreme conditions: the RSI is rising sharply and remains deep in overbought territory, while the ADX is exceptionally elevated, pointing to a very strong, mature trend phase. Structurally, price remains far above earlier consolidation zones around $4,035 and $3,935, underscoring the magnitude and persistence of the advance. Overall, the chart depicts an extended momentum-driven environment characterised by strong trend intensity, elevated volatility, and active price discovery.