Gold’s Shining Moment: Why Commodities Are Surging in 2025

Gold is glittering like never before. In 2025, the yellow metal has smashed through previous price ceilings, recently trading above US$4,200 per ounce; fresh all-time highs. That marks roughly a 60% surge just since January, a stunning run that outshines most stock markets and other assets. And gold isn’t alone: silver and other precious metals have ridden its coattails, with silver up around 70% year-to-date and briefly touching record levels near US$50 per ounce. What is driving these big moves, and what does it mean for investors?

In this article, we unpack the forces behind the commodities rally, from long-term trends to recent triggers, and explore what might lie ahead.

Gold’s Long-Term Glow: A 20-Year Journey

It helps to look back and see how far gold has come. Over the long run, gold has delivered solid gains for patient holders, rising over 1,000% since 2000. Of course, the journey wasn’t straight up. Gold saw a tremendous bull run in the 2000s, climbing from around US$300 per ounce in the early 2000s to nearly $1,900 by 2011. After that peak, it cooled off, by the mid-2010s gold had pulled back to the low $1,000s and spent several years range bound. Another breakout began around 2019–2020: the pandemic turmoil and its aftermath pushed gold above $2,000 again, and after some choppiness it has skyrocketed in the last two years from the $1,800s to well over $4,000 today.

The Recent Rally: From Simmer to Boil (2020–2025)

Looking closer at the last few years, gold’s rally has gone from a simmer to a full boil. It broke above $2,000 during 2020’s pandemic panic, then seesawed as economies reopened. But since late 2022, the metal has been on a tear rising about 150% in under three years, from around $1,600 in October 2022 to over $4,000 by October 2025. This steep climb in such a short span is almost unheard of for an asset often considered stable or conservative. In fact, analysts note it’s one of the most dramatic moves in gold’s modern history, rivalling the late 1970s boom in speed and scale.

What changed to supercharge gold? In short, a “perfect storm” of factors converged. Globally, investors grew anxious about inflation and the value of paper money after massive moneyprinting during the pandemic. Geopolitical tensions flared (from the Ukraine conflict to new trade disputes), adding demand for safe havens. And critically, by 2023–2024 central banks signalled they might ease up on interest rate hikes as economies slowed, raising hopes that real interest rates would fall; a classic boon for gold prices. In 2025 especially, gold fed on every headline of uncertainty: talk of currency “debasement” and de-dollarisation, signs of economic slowdown, and policy drama in major economies all sent investors rushing to the sanctuary of gold. Each new milestone ($2,500… $3,000… $3,500) seemingly attracted more momentum buyers fearing they’d miss out on the action.

From an Australian perspective, this global gold fever has been amplified by currency moves. Since gold is priced in USD, a weaker Australian dollar means Aussie investors see even higher gold prices in AUD terms. In fact, over the past five years gold rose about 80% in USD – but over 100% in AUD due to a declining local dollar. For Australians holding gold, it’s been a doubly rewarding ride.

Silver and Friends: Other Precious Metals Ride Gold’s Coattails

Whenever gold has a party, other precious metals usually join it; and this time is no exception. Silver, often called gold’s “little brother,” has seen an even more explosive move in percentage terms. In 2025, silver not only joined gold’s rally, but it also nearly stole the show with a surge of around 70–80% year-to-date. The metal shot up to roughly US$49–50 per ounce, its highest level in decades, effectively matching its 1980 and 2011 record peaks. Gold exerts a “gravitational pull” on silver: when gold soars, investors often pile into silver as a cheaper way to ride the precious-metals wave or in hopes that silver will follow gold’s lead. This dynamic seems to be playing out now; gold’s glitter is rubbing off on silver in a big way.

Of course, silver has its own fundamentals too. It’s an industrial metal used in everything from solar panels to electronics, and lately silver’s supply/demand balance has been tight, adding extra fuel to its price rise. (2025 is seeing projected silver supply deficits in the hundreds of millions of ounces.) But the overarching narrative this year is that silver is surfing in gold’s wake. Many see silver’s typical behaviour as a high-beta version of gold, it moves similarly, just with more volatility (both up and down).

And it’s not just silver. Other precious metals are soaring too. Notably, platinum has outpaced both gold and silver in 2025, with an eye-popping +84% price jump year-to-date. This makes platinum the best-performing precious metal of the year so far. Palladium (used heavily in car exhaust catalysts) is up around 60% as well. These lesser-followed metals are benefiting from the same themes driving gold: safe-haven demand, investors hedging against a falling dollar, and some supply constraints. The key takeaway is that when gold shines, it tends to cast a glow on the whole precious metals group. All the shiny metals are dancing to the same tune in 2025, with gold leading the orchestra.

What’s Driving the Surge? The “Perfect Storm” for Gold

Several forces have combined to light a fire under gold and commodities. In brief, we’re seeing high demand driven by economic fears, geopolitical tensions, and strategic buying, all at a time when supply growth is limited. Below is a summary of the key drivers behind the surge:

Inflation and Currency Fears:

After years of hefty money-printing and stimulus, many investors are worried about the long-term value of paper currencies. Gold, which no government can print, is the go-to hedge. For example, from 2020–2022 the US money supply (M2) ballooned by roughly 40%, and government debts swelled worldwide. That’s made people nervous about potential currency devaluation. Gold’s rise can be seen as a signal of declining confidence in fiat money. Investors are effectively saying they’d rather hold a hard asset than more dollars or euros. This theme is global: as one illustration, gold has even overtaken the euro as the second-largest asset in many central bank reserves (after the US dollar), reflecting a shift away from paper currencies towards gold.

Geopolitical Tensions and Uncertainty:

The world hasn’t been a calm place in recent years.From the Ukraine and Middle East conflicts to trade disputes among major powers, have kept uncertainty high. Gold traditionally shines during such times of turmoil, as it’s seen as a safe haven when other investments seem risky. According to the World Gold Council, gold has delivered positive returns during ~70% of major geopolitical events since 2000. The recent period has been no exception: each flare-up (e.g. a trade war headline or election shock) tended to boost gold as investors sought a refuge. In 2025, for instance, tensions over global trade and policy (including a bout of U.S.–China trade angst and questions over U.S. fiscal policy direction) have added extra fuel to gold’s rally.

Central Bank Buying:

A less visible but hugely important factor is central banks snapping up gold. In the past couple of years, central banks around the world, especially in emerging markets like China, Turkey, India and Poland, have been purchasing gold at a record pace. In 2022, official sector gold buying hit 1,136 tonnes, the highest annual total since 1967, and 2023 saw another ~1,000+ tonnes added. This wave of central bank demand has provided a steady floor under the gold price, as these buyers are price-insensitive andoften buy for strategic reasons (diversifying away from the US dollar, bolstering reserves for safety). For investors, knowing that central banks are in the market adds confidence, it’s like having a big, consistent bidder in the gold auction. (It also ties back to the currency fears: central banks themselves are hedging against the dollar by holding more gold.)

Interest Rates and the Dollar’s Outlook:

Gold famously has no yield, so it tends to do best when interest rates are low or falling. In 2022–2023, central banks (like the US Federal Reserve and our own RBA) were raising rates sharply to fight inflation, which initially put a lid on gold. But by 2024–2025, markets began to anticipate that rate hikes were peaking, and cuts could be on the horizon as economies showed signs of cooling. This prospect was a green light for gold. Real interest rates (interest minus inflation) are still low in many places, and any hint of future rate relief weakens the dollar and lowers the opportunity cost of holding gold. Indeed, part of gold’s huge 2025 run has been about a softer dollar, as the USD wobbled from its highs, gold (priced in USD) naturally rose.

Momentum and Technical Factors:

Finally, it’s worth noting that success breeds success in markets. As gold broke record highs, it likely attracted trend-following investors and momentum traders. Higher prices brought in media attention, which brought in retail investors, creating a virtuous cycle. There’s also a bit of “FOMO” (fear of missing out) at play, some buyers piled in simply because gold was going up fast and they didn’t want to miss the ride. This speculative froth can exaggerate moves in the short term. It’s hard to quantify, but the steepness of the recent climb suggests that gold’s fundamentals were turbocharged by a dose of excitement and herding behaviour.

In combination, these factors formed a perfect storm driving gold and its commodity cousins higher. Importantly, none of these are overnight developments – they’ve been building for a while. But 2024–2025 hit an inflection where all the drivers kicked in together, and the result was a strong upside for precious metals.

What It Means for Australian Investors

For Australians, the commodities surge carries some unique implications. Gold’s rally has been a windfall for our economy and investors. Australia is the world’s third-largest gold producer, so record prices translate into higher export revenues, royalties, and mining activity at home. In FY2024, gold was Australia’s fourth-largest goods export (after iron ore, coal and natural gas), worth over AUD $32billion to the economy. Gold mining companies are enjoying fat profit margins and have seen renewed investor interest. (If you hold Aussie gold mining stocks in your portfolio or super fund, you’ve probably noticed!) Australian investors have also been jumping on the gold bandwagon. Goldbacked ETFs traded on the ASX (like the Perth Mint’s PMGOLD) have seen strong inflows in 2025. Physical bullion demand is robust too, with local dealers reporting increased buying.

It’s also worth noting the currency angle for Australian investors. As mentioned, a falling AUD has supercharged gold’s performance in local terms. If the Australian dollar remains under pressure (for example, due to weaker global growth or China’s commodity demand softening), gold in AUD could stay elevated even if USD gold prices stabilize. Conversely, if the Aussie dollar were to strengthen sharply, it might cap some of gold’s gains here.

Looking Ahead: How Long Can the Glitter Last?

After such a massive run-up, everyone’s asking the same question: what next for gold and commodities? Will the rally continue, or are we due for a pullback? While crystal balls are in short supply, we can sketch out a few potential outcomes and considerations.

On one hand, many of the supportive factors are still in play. If global economic jitters, inflation worries, or geopolitical tensions persist or worsen, gold could have more room to run. If central banks follow through with rate cuts (or any major economy hits a stumble that prompts more stimulus), that could weaken currencies and boost gold further. In a scenario of recession or renewed money printing, one could imagine gold testing new highs yet again.

However, there are also reasons to be cautious. Markets rarely move in a straight line forever. After a parabolic rise, gold and silver could see bouts of profit-taking or corrections. Even strong long-term bull markets have pullbacks. For gold producers, as gold prices get high, it incentivises more supply, miners will dig more and new projects become viable, which eventually can increase gold output and take pressure off prices.

We’re already seeing gold mining companies ramp up exploration and production thanks to these price levels. Likewise, if inflation credibly cools and central banks hold rates higher for longer than expected, the narrative could shift and dent the enthusiasm for holding nonyielding assets like gold.

Investors should also remember that sentiment can reverse. The same momentum that drove gold up could work in reverse if the winds change. For example, if a major geopolitical conflict de-escalated or a breakthrough trade deal boosted confidence, some of the fear premium in gold might fade. And since a lot of late-to-the-party buyers have jumped in, any sharp drop might be exacerbated by those newcomers rushing for the exits. Volatility goes both ways.

For those who have enjoyed the ride up, it might be a good time to check in on your portfolio mix, possibly rebalancing if gold now takes up a much larger percentage than intended. For those feeling they missed out, be careful about jumping in with both feet at record highs without a plan. As always, your investment decisions should connect to your long-term objectives and risk tolerance.