Khan Capital | October 2025
Key Takeaways
- Gold surpassed $4,000 per ounce for the first time on 7 October 2025, its 45th new all-time high of the year, with the move from $3,500 to $4,000 taking just 36 days.
- Central banks have purchased over 1,000 tonnes annually since 2022, with their share of total demand rising to nearly 25%, driven by de-dollarisation and the demonstrated confiscation risk of dollar-denominated reserves.
- Western ETF demand has returned decisively, with Q3 2025 recording the strongest quarter of inflows on record at $26 billion, yet the current accumulation phase represents only 30-40% of prior bull market cycles.
- Gold mining equities have surged approximately 120% year-to-date but remain undervalued relative to the commodity, with record margins creating an opportunity for leveraged exposure.
- J.P. Morgan targets $5,000/oz by Q4 2026, supported by structural demand that the World Gold Council characterises as having “further to run.”
On 7 October 2025, gold futures closed at a record $4,004.40 per ounce, having touched an intraday high of $4,014.60. It was the metal’s 45th new all-time high of 2025. The move from $3,500 to $4,000 took just 36 days, compared to an average of 1,036 days between prior $500 incremental milestones. Prices have risen approximately 50% year-to-date. The US dollar index has dropped 10%. And the structural forces driving gold’s ascent show no signs of exhaustion.
Gold at $4,000 is more than a round number. It represents the culmination of a multi-year regime change in how governments, central banks, and institutional investors think about reserve assets, portfolio construction, and the role of a non-sovereign store of value in an increasingly fractured global financial system.
| Gold Demand Driver | 2025 Data | Historical Comparison |
|---|---|---|
| Central Bank Buying | 410 tonnes in H1 2025 | 24% above 5-year average; ~25% of total demand |
| Gold ETF Inflows | 634 tonnes YTD; $67bn | Q3 2025: strongest quarter on record at $26bn |
| Investment Demand | 1,560+ tonnes through Q3 | 33% increase over 2024 |
| Price Performance | +50% YTD to $4,000+ | Strongest year since 1979 |
| Dollar Index | -10% YTD | Weakest since 2020 |
| Gold’s Share of Assets | ~2.8% of global financial assets | Rising but still below prior bull market peaks |
The Central Bank Buying Revolution
The single most important structural driver of gold’s bull market is the unprecedented pace of central bank accumulation. Since 2022, central banks have purchased over 1,000 tonnes of gold annually, roughly double the decade-long average. Central banks’ share of total demand rose to nearly 25% in 2024, compared with 12% in 2015-19. In the first half of 2025 alone, central banks added 410 tonnes to their reserves, 24% above the five-year average. The World Gold Council’s latest survey found that 95% of central banks surveyed expect to increase their gold holdings over the next 12 months.
The buying is led by emerging market central banks, notably China, Turkey, Poland, and India, and the motivation is unmistakably geopolitical. The freezing of approximately $300 billion in Russian central bank reserves by Western governments in 2022 demonstrated that dollar-denominated reserves carry confiscation risk. Gold, which is held physically and cannot be frozen or sanctioned, offers a form of sovereign insurance that no fiat currency can match. China holds less than 10% of its reserves in gold, compared to around 70% for the US, Germany, France, and Italy, suggesting significant room for continued accumulation.
The Return of Western Investment Demand
After several years of ETF outflows during the rate-hiking cycle, Western investment demand has decisively returned. Global physically-backed gold ETFs recorded their largest monthly inflow in September 2025, with the third quarter marking the strongest quarter on record at $26 billion. Year-to-date, ETFs have added 634 tonnes, bringing holdings to within 2% of their 2020 peak.
The World Gold Council’s analysis suggests the current ETF accumulation phase is still in its early stages. The two previous prolonged gold ETF bull runs lasted 221 and 253 weeks respectively, adding 1,823 and 2,341 tonnes. The current run began in May 2024: at 74 weeks in, holdings are up 788 tonnes, representing only 30-40% of the total seen in prior runs.
What the Market Is Misunderstanding
This is not a speculative bubble; it is a structural re-rating. The 2011 rally was driven primarily by fear of sovereign debt crises. The current rally is driven by sovereign actors (central banks) making strategic allocation decisions. Central banks are not momentum traders; they are building structural positions that reflect a long-term reassessment of reserve asset allocation.
The dollar’s decline is a cause, not just a correlation. The combination of the Fed’s rate cuts, the tariff-driven erosion of confidence in US economic policy, and the structural shift in central bank reserve preferences away from dollar-denominated assets is creating a secular headwind for the currency.
Gold’s allocation in institutional portfolios remains low. Gold’s share of total global financial assets has risen to approximately 2.8%, but this remains well below levels seen during previous gold bull markets. J.P. Morgan forecasts continued robust investor and central bank gold demand, averaging around 585 tonnes per quarter in 2026.
Gold miners have lagged the metal, creating a valuation disconnect. Gold mining equities have surged approximately 120% year-to-date but remain undervalued relative to the underlying commodity. Margins at current prices are at or near record levels for most major miners.
The De-Dollarisation Narrative: Overstated but Directionally Correct
The most extreme versions of the de-dollarisation narrative are not supported by the data: the dollar still accounts for approximately 58% of global foreign exchange reserves. But the directional trend is real: the dollar’s share has declined from over 70% in 2000 to 58% today. Central banks are diversifying not because they have found a replacement for the dollar but because they want to reduce their vulnerability to a system in which the dollar’s dominance can be weaponised through sanctions and reserve freezes.
Implications for Investors
Gold may deserve a strategic allocation, not a tactical trade. The structural drivers are multi-year forces that will not be reversed by a single quarter of profit-taking. A 5-10% strategic allocation to gold, held through physical bullion or physically-backed ETFs, is worth considering for most diversified portfolios.
Expect consolidation, not collapse. After a 50% year-to-date gain, some price consolidation is healthy and expected. Investors may wish to treat any pullback as an opportunity to build positions.
Gold miners offer leveraged upside. At current gold prices, major miners are generating record free cash flow with strong balance sheets and rising dividends.
The dollar’s trajectory matters. Gold is priced in dollars, and its gains have been amplified by dollar weakness. Currency dynamics should be monitored alongside commodity fundamentals.
Conclusion
Gold at $4,000 per ounce is not the ceiling; it is a waypoint. J.P. Morgan targets $5,000 per ounce by the fourth quarter of 2026. Goldman Sachs sees similar potential. The World Bank projects precious metal prices will reach new all-time highs in 2026, supported by safe-haven demand and continued central bank buying. The question for investors is no longer whether to own gold but how much, and in what form.
Sources: World Gold Council, J.P. Morgan Global Research, Amundi Research, LSEG, World Finance, World Bank
The Khan Capital Brief
Understand what moves markets
Analysis like this, free in your inbox. No spam, unsubscribe any time.
Related Reading
Gold’s surge was driven by the geopolitical tensions covered in Israel-Iran War and Oil Above $100: Strait of Hormuz. For the portfolio implications, see Defence, Energy, and Gold: The 2026 Geopolitical Portfolio.
For the fundamentals behind this story, start with how safe havens work and the dollar’s reserve role.
Leave a Reply