$Gold Futures(APR5) (GCmain.US)$Aiming for the milestone of $3,000 per ounce, the years-long buying frenzy by central banks and the economic uncertainties associated with Trump's policies have led to Gold's performance outpacing other asset classes this year.

At the same time, gold mining stocks that lagged behind gold in 2024 are starting to catch up this year.

However, in the long term, despite Gold repeatedly reaching historical highs, it has still not kept pace.$Bitcoin (BTC.CC)$With the significant rise of the US stock market.

Adrian Ash, research director at BullionVault in London, stated: "Gold typically performs well when other assets are underperforming, especially when the stock market is on a sustained decline. But the current stock market is also hitting historical highs."

He mentioned that in his over 25 years in the gold market, he has "only seen this pattern of gold and stock markets twice" — the first time was before the global financial crisis from 2005 to 2007, and the second was in mid-2020, when "stimulus plans, zero interest rates, and massive algo laid the groundwork for double-digit inflation."

From the beginning of the year until now, the price of Gold Futures on COMEX has risen by more than 11%.$VanEck Gold Miners Equity ETF (GDX.US)$It has increased nearly 24%. Meanwhile,$S&P 500 Index (.SPX.US)$after reaching a historical high of 6118.71 points on January 23, it has risen by over 3% this year.

Although the recent price milestone of Gold may be a reason for bulls to celebrate, the rise of Gold has not been that impressive when looking at its performance since mid-2020. Mid-2020 marked the last few months of Trump's first term when Gold prices broke the psychological barrier of 2000 dollars.

According to Dow Jones market data, as of February 10, since Gold first broke the 2000 dollar mark on July 31, 2020, the most active Gold futures contracts have risen by 47.8%. This performance is indeed impressive compared to the 18% drop of the iShares Treasury Bond ETF during the same period, but it pales in comparison to Bitcoin's cumulative rise of about 761% and the S&P 500's total ROI of 98.7%.

James Turk, founder of Precious Metals trader Goldmoney, stated that few people pay attention to Gold hitting record highs, "let alone buying it. They are focused on Hot markets like Bitcoin and Technology stocks. But this is not uncommon—this is how a Gold bull market begins."

Potential Issues

Although the rise of US stocks shows that investors are optimistic, Gold climbing to the psychological barrier of 3000 dollars per ounce may indicate problems facing the Global economy. Ash stated: "If Gold is a barometer of economic and political fears, then this rise to 3000 dollars indicates that the world is becoming increasingly anxious and distrustful."

Ash pointed out, "While Trump's voters believe he has addressed domestic issues in the USA, Fund managers and leaders of foreign central banks see uncertainty in global trade, finance, and the very real risks of instability and chaos."

Therefore, he believes that in the short term, the biggest factor driving Gold to reach historic highs is Trump. "Gold tends to thrive in economic uncertainty, financial risks, and geopolitical turmoil. The 47th President of the USA is providing all of that."

Driving Factors

According to data from the World Gold Council (WGC), central banks have been major buyers of Gold, increasing their purchases for the 15th consecutive year in 2024, totaling 1,044.6 tons of Gold.

George Milling-Stanley, chief Gold strategist at State Street Global Advisors, stated: "Central banks (mainly from Emerging Markets) have been significant buyers of Gold. These purchase volumes doubled from 2021, exceeding 1,000 tons in 2022, and maintaining this high level in 2023 and 2024...part of this is a response to the U.S. government's decision to impose sanctions on Russia."

Milling-Stanley pointed out that demand for Gold jewelry and investment in Emerging Markets increased significantly in 2024, while Gold investment in Western Europe and North America also saw strong growth last year—partially due to macroeconomic factors but also related to the tense geopolitical situation.

Turk from Goldmoney believes that the last time Gold prices reached an all-time high may be traced back to March 2023.$SVB Financial (SIVBQ.US)$collapse.

He stated that this "awakened global investors to the vulnerability of the banking system in the face of high interest rates," driving Gold prices to record high levels. Gold is the "ultimate safe haven for protecting purchasing power, as you have no counterparty risk when you Hold physical Gold," Turk noted.

Critical Moment

Milling-Stanley believes that a Gold price of $3,000 per ounce could provide validation for "investors who have allocated to Gold in the past." He added that increased media attention on this level might trigger a "fear of missing out on Gold, attracting more investors to participate."

Although some private investors might think that the price is "a bit high," central banks and sovereign wealth funds generally have lower sensitivity to price fluctuations than the private sector.

However, the real question is whether Gold can not only reach but also maintain a level of $3000 in the long term. Ash points out: "In the past, large integer thresholds have scared off Gold bulls." He noted that spot Gold has struggled to stay above $1000 and $2000 for an extended period after initially breaking through these levels.

Editor/ping