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The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

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Gold has surpassed significant psychological thresholds amid heightened uncertainty. The first instance of gold breaching the $1,000 per ounce mark took place during the financial crisis of 2008. The $2,000 barrier was crossed during the pandemic. Most recently, gold reached $3,000 for the first time, primarily driven by uncertainties stemming from Trump's tariff policies.

While Trump may be criticised for the current chaos, the gold rally began when the western powers decided to freeze $300 billion worth of Russian assets following Russia's invasion of Ukraine in 2022.

Central banks around the world have come to realise that the US dollar can be used as a weapon due to their limited access to the financial system. As a result, central bank purchases of gold have doubled since the invasion, increasing from about 500 tonnes annually in previous years to over 1,000 tonnes in the last two years. In 2024, central banks set a record by purchasing 1,180 tonnes of gold, following purchases of 1,082 tonnes in 2022 and 1,037 tonnes in 2023.

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Countries such as India, China, Poland, and Turkey have been actively purchasing gold to strengthen their reserves. In 2024, India emerged as the second-largest gold buyer, following Poland, which bought 89.54 tonnes of gold. India acquired 72.60 tonnes while China purchased 44.17 tonnes.

In 2025, US traders hurried to purchase gold due to concerns about a potential increase in import duties. According to a Bloomberg report, more than 23 million ounces of gold, valued at around $70 billion, were deposited into New York's Comex futures exchange from election day until March 12. This significant influx contributed to a record high in the US trade deficit in January.

The rally in gold prices is particularly significant because it has occurred even when economic conditions are typically unfavourable. Normally, high interest rates and a strong US dollar would prompt investors to move away from gold. However, this time, gold prices have increased despite facing these challenges.

Uncertainty has proved to be the biggest factor driving gold prices, overshadowing interest rates and the strength of the dollar. Trump's policies have significantly contributed to the confusion surrounding these issues.

In addition to central banks and investment demand, the gold market has gained a new buyer. China recently initiated a pilot programme that permits 10 major insurance companies to invest up to 1 percent of their assets in gold for the first time. This programme, announced by the National Financial Regulatory Administration on February 7, 2025, could increase demand by $27 billion and help support gold prices.

The $3,000 mark for gold has now been surpassed, leading to questions about what lies ahead for its price. Analysts at Bank of America, led by Michael Widmer, believe that if gold investment demand increases by 10 percent, a price level of $3,500 per ounce could be achievable. Additionally, Goldman Sachs has indicated that there is a potential upside risk to its base case scenario, which projects a gold price of $3,100 by the end of 2025. Their forecast range is between $3,100 and $3,300.

Macquarie updated its 2025 gold price forecast to a high of $3,500 an ounce by the third quarter. This level would closely align with the inflation-adjusted record of $3,505 per ounce from January 1980.

In his market and macro outlook recorded on March 11, DoubleLine CEO Jeffrey Gundlach said, "I think gold will make it to $4,000. I’m not sure that’ll happen this year, but I feel like that’s the measured move anticipated by the long consolidation at around $1,800 on gold."

Analysts point out that while gold prices have reached a new nominal high, they remain below the inflation-adjusted peak of approximately $3,500 per ounce set in 1980. The 1980 peak was driven by significant uncertainties, including Russia's invasion of Afghanistan, the Iran hostage crisis, and Federal Reserve Chairman Paul Volcker's substantial interest rate hikes aimed at curbing inflation.

Gold has consistently demonstrated its value as a reliable safe haven during periods of uncertainty. In the current scenario, it has once again upheld its reputation as a trusted refuge.

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