Gold price continued its strong rally this year, reaching its highest point on record. It rose to a high of $4,530, up by over 70% from its January levels. This surge made it one of the best-performing assets in the financial services industry.
Why gold price surged in 2025
There are a few reasons why gold prices surged in the past few months. First, the surge happened as investors embraced it as a safe-haven asset after Donald Trump’s election.
Trump announced major tariffs against all countries, including its top trading partners like Mexico, China, India, and the European Union.
Second, gold price jumped as demand from some major entities accelerated. A good example, Tether bought gold worth over $14 billion this year. It uses these gold holdings to back up the USDT stablecoin and Tether Gold.
Most importantly, top central banks like those in China and India continued to accumulate gold as a way of diversifying from the US dollar, which has lost value to inflation in the past few years.
Third, gold jumped as investors reacted to the weakening US dollar. Data shows that the US dollar index (DXY) plunged to $96 from the year-to-date high of $110. Gold has an inverse relationship with the US dollar.
Additionally, the metal continued its rally as the Federal Reserve started cutting interest rates during the year. It delivered three cuts and ended its quantitative tightening (QT) policy. The bank also hinted that it will continue cutting in the coming year.
Meanwhile, US public debt has continued rising in the past few months and is now at $38.5 trillion. This trend means that the figure will continue soaring in the coming years and potential move to $40 trillion.
The global M2 money supply has also continued rising, making gold a viable alternative. Historically, gold is seen as a safe haven and an alternative to the US dollar.
Further, gold price jumped as investors continued accumulating it in the spot market and its ETFs. Data compiled by ETF.com shows that the SPDR Gold ETF attracted over $23 billion in inflows this year.
Will XAU rally continue in 2026?
Looking ahead, gold price may continue rising as investors embrace the Fear of Missing Out (FOMO). FOMO is a situation where investors buy assets to avoid missing out a prolonged rally over time.
The metal will also benefit from the upcoming changes at the Federal Reserve. Donald Trump will replace Jerome Powell with a Fed official who will be more open to cutting interest rates to 1%.
The only hope is that Fed officials have started dissenting, meaning that many may push back against intensified rate cuts. For example, two officials backed leaving rates unchanged in the last meeting, while Stephen Miran voted to cut by 50 basis points.
However, there is a risk that gold will retreat in 2026 as investors start taking profits.
Gold price technical analysis
The daily chart shows that gold has been in a strong rally this year and is now at its all-time high. It recently moved above the important resistance level at $4,375, the previous all-time high.
The challenge, however, is that gold remains much higher than the 100-day and 50-day Exponential Moving Averages (EMA). This means that gold may go through mean reversion, a situation where its price moves back to the historical average.
Also, the Relative Strength Index has moved to the extreme overbought level of 82. Therefore, there is a risk that the metal will pull back, potentially to $4,000 and then resume the uptrend.
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