Mumbai, Oct 16 : Gold prices have hit unprecedented levels, reaching USD 4,200 per ounce just days after crossing the USD 4,000 mark on October 9, marking the fastest USD 500 surge in the metal’s history, according to the World Gold Council (WGC). The rally from USD 3,500/oz to USD 4,000/oz occurred in just 36 days, far quicker than the historical average of 1,036 days for similar gains.
Despite the record-breaking pace, the WGC notes that the current rally is still below the average duration and magnitude of past bull runs, such as the 856-day rally from 1976-1980, the 1,168-day rally from 2007-2011, and the 1,162-day rally from 2015-2020.
The surge in gold prices this year has been driven by strong investment demand, particularly from Western investors seeking safety amid geopolitical tensions, a weaker US dollar, expectations of additional US Federal Reserve rate cuts, and concerns over equity market corrections. Central bank purchases have further reinforced investor confidence, supporting the rally.
However, the WGC has cautioned that short-term corrections are possible. Technical indicators, including a relative strength index (RSI) above 90 and prices trading over 20% above their 200-day moving average, suggest gold may be overbought. Tighter credit conditions could also trigger asset liquidations as investors seek liquidity, while easing geopolitical risks could shift capital toward riskier assets.
The Council also highlighted that the rapid surge might impact consumer demand during the traditionally strong seasonal period, as strategic investors rebalance portfolios following the sharp rally.
“Short-term volatility may arise from portfolio rebalancing, market corrections, and technical signals, while long-term resilience is underpinned by a broadening investor base, persistent policy uncertainty, and a gold investment market that still has room to grow,” the WGC said.