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‘Approach with caution’: a warning to the public as gold and silver prices skyrocket
International

‘Approach with caution’: a warning to the public as gold and silver prices skyrocket

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Hundreds have been queuing at retailers across Australia in recent days, but not for the latest iPhone or a flash sale.
Instead, they wait hours before buying and selling gold.

Those in line were boosted as precious metal prices hit record highs, with an ounce of gold hitting more than $6,700 on Friday, on top of a 70 percent price increase this year alone.

Queues for gold retailers across the country are starting to stretch. Source: Tweet / X / Destined investments

In other words, in early 2025 it would have been about $2,500 cheaper to buy an ounce of gold — and about half of this rebound occurred in the last 30 days.

A similar trend is occurring in other refined precious metals, with silver breaking a 45-year-old record on Tuesday by reaching $80.77 an ounce.

Why is the gold price rising?

Several explanations have been put forward to explain the rise in gold prices.
Isaac Poole, Global Chief Investment Officer at Oriana Private Wealth, told SBS News: “If you look at what has really driven demand for gold at the moment, it has been ETFs (exchange-traded funds).”
ETFs are funds that own a group of assets, such as stocks or bonds, and are bought and sold as individual stocks on the stock markets. According to the World Gold Council, September was the strongest month on record for gold ETF flows.
“You’re seeing this massive financialization of gold bullion through ETFs and retail investors rushing to buy after the market is already up 70 percent,” Poole said.

“I think that’s been the big story of this year and especially this past month.”

According to some experts, economic uncertainties surrounding government debt and the US government shutdown are part of the picture.
Some also suggest that central banks turn to gold to replace currency assets such as the US dollar.
According to the World Gold Council, central banks have shown an unprecedented appetite for gold in 2023 and 2024. They bought more than 1,000 tons of gold every year.
Poole is suspicious of this story.

“I would be careful about the story that it was central bank purchases. I think this was a story from 2022, 2023 and 2024,” he said.

“This isn’t about central banks: those purchases have slowed down. What I think you’re seeing now is a trickle-down effect for private buyers.”
While people in China and India buying gold jewelry has been one of the main reasons for the gold boom of the past decade, “at these prices and at these levels they are not buying anymore,” Poole said.

“So the traditional demand driver has disappeared, which essentially means it’s about retail demand. It’s a race by investors to buy bullion in stores.”

Will the gold price fall?

There are several predictions about where the gold price will go from here.
In an analysis earlier this month, the World Gold Council said it is “confident that gold will hold up” and “may see further upside” if stock prices were to fall.
Earlier this month, Goldman Sachs, the world’s largest investment bank by revenue, also raised its December gold price forecast to $4,900 ($7,545) per ounce from $4,300 ($6,621).

In an article in The Conversation, Luke Hartigan, an economics lecturer at the University of Sydney, noted that “continued demand from Russia and China” could also lead to further price increases.

However, Poole said the public “really needs to approach [the gold market] with caution”.
“I think there is a caveat here. I would attribute this to momentum and sentiment.”
While momentum and sentiment can push commodity prices higher, “it is critical to remember that gold can fall and remain low for a very long period of time,” he warned.
“I can’t pinpoint a turning point, but it feels like a melt-up over the past month. When you see a melt-up like that, it means prices could fall.
“What’s really critical to remember for gold is that if you look back over the last forty years, there have been at least three periods where gold fell 50 percent from its peak and then stayed at those lower prices for a decade.”

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