Gold Nears $4,000: Will Prices Cool or Keep Rising?
<p>Gold prices are once again rewriting history, with the precious metal now edging closer to the <strong>$4,000 per ounce milestone</strong>. Investors, buyers, and central banks alike are watching anxiously as the rally continues, raising one pressing question: <i>when will gold finally pull back?</i></p><p>On Wednesday, <strong>spot gold gained 0.8% to $3,886.97 an ounce</strong>, touching a new record high of $3,898.18. The gains come against a backdrop of heightened global uncertainty, rising inflation risks, and fiscal imbalances in major economies. For now, analysts say momentum firmly favours the bulls.</p><h3>The Drivers of the Rally</h3><p>Michael Brown, Senior Research Strategist at Pepperstone, notes that calling a top in gold is “pretty much a fool’s errand.” He explains that the rally is supported by strong fundamentals:</p><p><strong>Diversification by central banks</strong> and large institutional investors.</p><p><strong>Lingering inflation concerns</strong> as spending remains elevated in developed markets.</p><p><strong>Safe-haven demand</strong>, boosted by economic and geopolitical uncertainty.</p><p>Adding to the bullish sentiment is the ongoing <strong>US government shutdown</strong>, which has stalled economic data releases and forced the furlough of 750,000 federal workers, costing around $400 million a day. Such turmoil has reinforced the case for gold as a secure store of value.</p><p>“Gold thrives when real rates fall and macro uncertainty spikes,” Brown said, pointing to the current environment as near-perfect for the yellow metal.</p><h3>Key Price Levels to Watch</h3><p>At present, traders are eyeing <strong>$3,900 and $4,000</strong> as the immediate psychological milestones. While these levels don’t represent technical resistance in the traditional sense, they hold symbolic weight in a market defined by investor sentiment.</p><p>On the downside, Brown highlights <strong>$3,700</strong> as the nearest support level, with stronger support at the <strong>50-day moving average of $3,505</strong>. “As long as we stay above that latter MA, the overarching trend remains upward,” he explained.</p><h3>Overbought but Still Climbing</h3><p>Some technical analysts have flagged the market as “overbought” for several weeks, but the rally shows no signs of slowing. Since early September, gold has surged over 10%, defying momentum-based caution signals.</p><p>“By many metrics, bullion has been ‘overbought’ for weeks, yet it keeps powering higher. Momentum-based analysis alone simply doesn’t capture the full picture,” Brown added.</p><h3>Central Banks Keep Buying</h3><p>Much of the strength behind the rally comes from <strong>“conviction buyers”</strong>—investors who are not trading short-term moves but are committed to gold as a strategic asset. This group includes central banks, exchange-traded funds (ETFs), and long-term institutional investors.</p><p>According to Goldman Sachs, every additional <strong>100 tonnes of gold purchases</strong> by these conviction holders typically lifts the metal’s price by <strong>1.7%</strong>. Central banks have been buying <strong>around 64 tonnes a month</strong> this year, and activity is expected to accelerate in autumn after a summer slowdown.</p><p>Goldman projects that with this level of consistent demand, gold could <strong>reach $4,000 by mid-2026</strong>, with the trend of official sector accumulation expected to last another three years.</p><h3>Weakening Ties With the Dollar</h3><p>Traditionally, gold moves inversely to the US dollar, but analysts say that correlation has weakened. Despite the greenback firming against major currencies recently, gold has continued to rise.</p><p>“The same goes for the policy backdrop,” Brown noted. “Even if the Federal Reserve leans hawkish, the typical inverse link between gold and real rates has been broken since mid-2022. It’s unlikely to reassert itself anytime soon.”</p><p>This suggests that the current rally is being driven by forces beyond the usual dollar-gold dynamics, reinforcing the idea that the bull run has deeper foundations.</p><h3>Correction or More Upside?</h3><p>For now, analysts caution that any dip in gold is more likely to be a <strong>buying opportunity</strong> than the beginning of a sustained decline. The key supports—central bank accumulation, fiscal expansion in developed economies, and ongoing global uncertainty—remain firmly in place.</p><p>If those conditions persist, gold could remain elevated well into 2026, with dips attracting fresh buyers rather than triggering a mass sell-off.</p><h3>What It Means for Buyers and Investors</h3><p>For jewellery buyers and retail investors, the surge has made gold more expensive than ever, particularly in the UAE and other Gulf countries where demand traditionally spikes during wedding and festive seasons. With December approaching—a period of high seasonal demand—further price pressures may emerge.</p><p>Analysts advise retail buyers to watch for short-term corrections, particularly if gold dips toward <strong>$3,700 or $3,500</strong>, levels that may offer more attractive entry points. However, those hoping for a sharp drop in the near term may be disappointed.</p><h3>The Bottom Line</h3><p>Gold’s march towards <strong>$4,000 an ounce</strong> underscores the scale of demand and the fragility of the current economic landscape. As long as central banks continue stockpiling and uncertainties cloud the outlook for global growth and inflation, the safe-haven rally looks set to continue.</p><p>For now, investors may need to accept that any pullback will be shallow—and for buyers, the golden question of “when will prices drop?” might not have a convincing answer anytime soon.</p>