$3500 to $4000/oz: Gold's 36-day $500 gain fastest in history, says WGC

The rally in gold prices from trough to the milestone mark of $4,000 per ounce (oz) hit on October 09 is just ‘735 days young’, suggests a recent note by World Gold Council (WGC). 

 

While it took another 7 days to breach the record $4,200/oz mark, the $500 climb from $3500/oz to $4,000/oz level is the fastest in gold’s history, WGC said. Prices, WGC said, have more headroom amid intermittent corrections.

 

“The pace of gold’s ascent is striking, with prices rising from $3,500/oz to $4,000/oz in just 36 days — far quicker than the historical average of 1,036 days taken to achieve similar $500/oz gains,” WGC said.  CLICK HERE FOR THE GRAPHIC 

 

 

Gold’s recent run, WGC said, remains below the average duration and magnitude of previous bull runs. The yellow metal took 856 days to reach its peak level between August 1976 and January 1980; 1,162 days between December 2015 to August 2020; and 1,168 days between January 2007 and September 2011, data shows. 

Gold prices

 

This year’s rally, WGC said, has been fuelled by increased investment demand, led by the West, as investors seek a 'safe-haven' amid geopolitical tensions, dollar weakness, expectations of further Fed cuts, and fears of an equity market correction. 

 

Continued central bank buying has helped too, WGC said, both in driving offtake but also cementing the positive narrative.

 

Rising prices have undoubtedly led to increased investor interest, further accelerating momentum. This is notable in gold ETF (exchange traded fund) flows, which added $21 billion since the end of August to bring the y-t-d total to $67 billion.

 

According to WGC, there have been two prolonged gold ETF ‘bull-runs’ since 2003, lasting 221 and 253 weeks and adding 1,823 tonnes (between 2008 and 2013) and 2,341 tonnes (2015 - 2020), respectively.  

 

"The most recent run for gold ETFs began in May 2024: 74 weeks in, holdings are up 788 tonnes and net longs have increased by just 11 6tonnes. Compared to the averages of prior runs, this represents only 30 per cent – 40 per cent of the total," WGC said.

 

So, how much headroom is left for gold prices to climb?

 

Gold allocations amid the recent sharp run in prices may prompt portfolio rebalancing by strategic investors, WGC believes. 

 

Technically, too, indicators suggest that gold prices may take a breather. “The relative strength index (RSI) above 90 and prices more than 20 per cent above their 200-day average suggest an overbought market, which may see short-term investors to position for a reversal,” WGC said. GOLD PRICE TECHNICAL INDICATORS

 

Tighter credit conditions, too, could trigger liquidation of high-performing assets like gold as investor search for cash, WGC suggests. A resolution of geoeconomic risks could shift capital to risk on assets. The sharp gold price rally, WGC believes, can dampen consumer demand during an otherwise strong seasonal period.

 

Long-term bet

 

That said, despite short-term volatility, gold’s strategic foundation remains robust, WGC suggests. A diverse investor base, macroeconomic shifts, and policy uncertainty could continue to support long-term demand. 

 

"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," WGC said.

 

Christopher Wood, global head of equity strategy at Jefferies, too, recently sounded caution. “The near vertical ascent in both gold and gold mining stocks raises correction risks. Investors should view any sharp correction as an opportunity to accumulate,” Wood wrote in his weekly note to investors, GREED & fear.