Gold Rush And Bitcoin Boom – Whats Pushing These Assets To Record Levels?

That’s the blistering pace at which gold is galloping, and there seems to be no stopping.

On Tuesday, spot gold tested $4,000 per ounce before closing at a fresh high of US$3,977.19. On Wednesday, it had slipped slightly to US$3,953.5, but that was still up 8.68 per cent in the past 30 days, 32.59 per cent in the last six months, and has given a 50.71 per cent return in the past one year.

Bitcoin also at an all-time high

While gold has always been considered a safe haven for investors, and one that would probably get the blessings of your grandmother, another very different asset is making new highs as well – Bitcoin. On Monday, Bitcoin hit a new high of US$125,835.92. It breached the US$125,000 mark on Sunday. It has risen more than 33 per cent this year alone, and nearly doubled in value in the last one year.

The tariffs imposed by US President Donald Trump, and the weakness of the US dollar, have played a big role in this run, prompting investors to diversify away from US assets. The dollar index is down almost 10 per cent to 98.09 this year.

Trade Nation analyst David Morrison felt Bitcoin would have to consolidate at current levels before another breakthrough, and said: “Bitcoin has surged ever since it briefly broke below US$110,000 just over a week ago. The current rally means that Bitcoin has added around 13 per cent since 28th September.

“Its daily MACD (Moving Average Convergence Divergence) has turned up sharply, and while this indicates a rise in upside momentum, it may be that Bitcoin will need to consolidate before it has a chance to push up further.”

Bitcoin has a fixed supply, meaning no more than 21 million will ever exist. That always helps when the demand starts heating up. Almost 95 per cent of the 21 million are already in circulation.

Samson Mow, the chief executive of JAN3, told Sky News that was probably the major factor.

Mow said: “Bitcoin has been a ball pushed underwater for months – this move up was inevitable. Raw demand has simply caught up with the incredibly limited supply.”

Another big reason for both gold and Bitcoin going on a boil is the buy-in from Exchange Traded Funds (ETFs).

Goldman Sachs rationale on gold

Goldman Sachs said the recent rally is being driven by purchases by both central banks and Western ETFs. The American bank called them ‘sticky’ buyers and added speculative positioning has remained “broadly stable”.

A weaker dollar and growing interest from retail investors seeking a hedge against rising trade and geopolitical tensions were also factors.

Analysts, led by Lina Thomas, wrote in a client note: “Central bank bguying (is expected) to average 80/70 tonnes in 2025/2026 as EM central banks are likely to continue the structural diversification of their reserves into gold.”

There was an inflow of 170 tons over the past quarter by Gold ETF as against small outflows in Q2 2024. Asian-listed funds kept pace with the US flows, with a contribution of 70 tons. Combined with inflows in Q1, global gold ETF demand reached 397 tons, the highest first-half total since 2020.

“We see the risks to our upgraded gold price forecast as still skewed to the upside on net, because private sector diversification into the relatively small gold market may boost ETF holdings above our rates-implied estimate,” Goldman added, saying it expects central bank buying to average 80 metric tons in 2025 and 70 tons in 2026.

“In contrast, noisier speculative positioning has remained broadly stable. Following the large September increase, the level of Western ETF holdings has now fully caught up with our US rates-implied estimate, suggesting the recent ETF strength is not an overshoot.”

On September 30, Goldman Sachs Research forecast gold to rise 6 per cent through the middle of 2026 (as of September 24), underpinned by fresh demand from key groups of buyers.

Central banks purchased less gold in July than in an average month this year, according to Goldman Sachs Research. They have purchased 64 tonnes of gold per month this year, which is below the bank’s forecast of 80 tonnes per month.

Thomas explained: “This is consistent with the seasonal pattern. Central bank purchases tend to slow in the summer and re-accelerate from September.”

A recent survey data from the World Gold Council said 95 per cent of surveyed central banks expect global gold holdings to increase in the next 12 months, with none anticipating a decrease. Also, 43 per cent of surveyed central banks plan to increase their own gold holdings. None of the central banks planned to reduce their gold holdings.