Gold Hits Record Highs: What's Behind the Latest Surge
Why gold has reached record prices: central bank purchases, Russian production, consumer demand, and expert forecasts. Analysis of overheating risks and prospects for growth to $5,000 per ounce.
6 min read
Share:
AI summary
Gold prices have reached historic highs amid massive purchases by central banks and geopolitical instability. Russia is strengthening its position as the world's second-largest producer of the metal, while the population is actively using gold to protect savings. Experts are divided in their assessments: some see potential for growth to $4000-5000 per ounce, while others warn of market overheating and the risk of correction.
Global Drivers: Gold vs. the Dollar
Gold's surge is driven not only by geopolitics but also by fundamental shifts in the global financial system. In the first half of 2025, central banks worldwide purchased approximately 310–340 tons of gold, with the bulk of purchases concentrated in May, June, and July. China and India emerged as the largest buyers, while Turkey and Russia continued strengthening the gold component of their foreign exchange reserves. At the same time, global jewelry sector demand for gold in the first quarter of 2025 declined by 21%, demonstrating that the price growth driver comes specifically from monetary authorities and investors.
Alexander Belov, author of the Telegram channel "Sobachye Serdtse," told Argument Media: "Global debt is growing: sovereign borrowing by Western economies alone will reach $17 trillion in 2025. Against this backdrop, gold serves as a hedge against inflation and geopolitics. Central banks have already brought reserves to 36,000 tons—nearly matching the peak of the 1960s." And purchases will continue, which could push prices even higher. According to data from UBS Group, 52% of central banks intend to increase their gold allocation in reserves over the coming year.
However, analyst Artem Maksadov (NEBAFFET) sees risks: "Historically, when currencies depreciated, prices rose for all commodities that possess the property of a unit of exchange. Now, however, gold stands out against silver, platinum, oil, and food commodities. Speculatively, gold may continue to rise, but long-term, this situation looks unsustainable." According to him, a significant portion of the growth is explained not by economic fundamentals, but by a flight to safe haven.
Investor Oleg Kuzmichev adds: "Gold rising by one and a half times in a couple of years—that's already overheating. All gold miners are now in super profit, but for new investors there's a risk of buying at the peak."
The result is a paradox: gold is getting more expensive, but fundamental support is increasingly shifting toward demand from central banks and investment funds, while industry, conversely, is cutting production. Once investor appetite begins to decline, the market could experience a sharp correction. And this leads directly to the next question: how is Russia, one of the largest producers, preparing for the new realities of the gold market.
Russia the producer
Against the backdrop of the global rally, Russia remains one of the key players. The country consistently holds second place in the world, behind only China, in gold production volume. In 2024, it totaled around 330 tons, which is 5.3% more than the year before. According to the Ministry of Natural Resources, last year alone the increase in reserves from additional exploration and discovery of new deposits amounted to over 800 tons. A total of 229 new sites were discovered.
Today's major players include Polyus (Olimpiada, Blagodatnoye, Natalka, and the world's largest deposit, Sukhoi Log), Seligdar, GV Gold, and Highland Gold. Polyus has already announced it will invest hundreds of billions of rubles in developing Sukhoi Log—Russia's largest project with reserves exceeding 1,800 tons.
Alexander Belov notes: "Russia has a unique resource base and can increase production to 400–450 tons per year by 2030 thanks to Sukhoi Log and Kyuchus." But infrastructure remains the Achilles' heel: northern regions require investment in roads, energy, and personnel.
Russia essentially faces a dual situation: on one hand, large-scale deposits and growing reserves allow it to strengthen its position in the global market; on the other, rising costs and infrastructure constraints could undermine competitiveness. Higher mineral extraction taxes and environmental requirements add pressure on production costs. Not to mention the potential correction directly linked to geopolitical confrontation between countries around the globe.
Thus, the mining sector today is balancing between enormous potential and serious challenges. How well companies can adapt to these challenges will determine the future trajectory of the entire industry. And here another factor is important—the attitude of the population and investors toward gold as a savings vehicle.
The Population and Gold: A New "Currency" for Savings
For Russians, gold has become a new way to protect savings. The turning point came in spring 2022, when the government eliminated VAT on bullion purchases for individuals. The result was immediate: whereas previously sales volumes were measured in single-digit tons, in 2022–2023 Russians bought up to 100 tons annually—20 times more than in previous years.
In the first half of 2025, the population purchased 16.2 tons in bars and coins. Yet experts have mixed views on gold's investment appeal. "Bullion is a questionable asset due to liquidity issues. There's no guarantee you'll be able to sell it easily at a fair price," warns Artem Maksadov. He advises private investors looking to invest in gold to consider exchange-traded funds or unallocated metal accounts instead.
In conversation with Argument Media, Oleg Kuzmichev urged caution: "In rubles, gold can still be considered a hedge against devaluation. But in dollars, the main game has already been played. Buying at peak levels is risky." Belov, however, sees potential in expanding the product range: "For Russians, bars and unallocated accounts look promising, especially given the de-dollarization trend in the East."
Ultimately, gold has become something of a "new currency" for the population—an accessible tool for hedging against exchange rate fluctuations and inflation. But its capabilities are limited: high prices and questionable liquidity make bullion not a universal solution, but rather a niche way to preserve capital. At the same time, this is spurring banks to develop alternative instruments—unallocated metal accounts, exchange-traded funds, and digital services where costs are lower.
The situation shows that retail demand is an important element of the domestic gold market, but it largely depends on macroeconomic conditions and confidence in the financial system. In this sense, the dynamics of Russian purchases are directly linked to the future of prices: the greater the panic in the stock market, the stronger the interest in gold. This trend becomes a logical bridge to discussing prospects—whether prices can hold at record levels or whether the market faces a correction.
The Future: Driver or Overheating?
Forecasts for gold diverge. Optimists cite targets of $4,000–5,000 per ounce. Skeptics believe the market is overheated and a correction to $2,500–3,000 is possible. Jewelry demand is falling, leaving mainly investment demand, which increases volatility. Gold could rise alongside central bank demand, but once they slow their purchases, the price could head downward.
Belov believes geopolitics will remain the driver: "De-dollarization in the East is accelerating. China has allowed direct exchange of yuan for gold. For Russian investors, the metal remains a hedge against currency risks." Kuzmichev reminds us: "Only investment demand is growing. Once funds start taking profits, the price could easily fall." Artem Maksadov sums it up: "Gold is a good instrument for speculation, but not for long-term investment. It generates no income and has no significant consumer properties. And growing supply will eventually put pressure on the price."
Gold today is not just a metal, but a mirror of the global economy. For central banks it has become a strategic reserve, for Russia—a chance to cement its position in global production, for the population—a substitute for currency savings. But the higher the prices, the greater the risks of correction. Experts agree on one thing: gold will remain the strategic asset of the decade. Or at least until stability returns to global markets and geopolitics.
