Gold’s continued surge to record highs is being driven by deeper shifts in the global economy, reshaping the metal’s role in investment portfolios, according to Schroders, a multinational asset management firm.
Schroders senior portfolio manager for gold and commodities, James Luke, said the rally is increasingly shaped by global factors rather than short-term market movements.
Gold’s meteoric rise has sparked questions about how long it can last. Luke argues the move is a result of rising government debt and political pressure on central banks to grow competition between major powers. “Gold’s role may be changing rather than peaking,” he said.
Rather than being driven solely by US interest rates or short-term inflation concern, Luke says gold is responding to broader forces, including how countries manage reserves and hedge against geopolitical risk. “In this sense, the current rally is about long-term positioning, not market timing.”
China, he said, is a key but often overlooked driver. Despite its size, the country holds only a fraction of its reserves in gold, with the bulk tied to the dollar and other Western currencies. “Rising geopolitical tension and exposure concern mean that even gradual shifts in reserve allocations could support sustained demand for gold, making the rally more global and less US-centric.”
The trend is also visible across other precious metals. While gold has dominated headlines, silver and platinum saw sharp gains late in 2025, reflecting tightening supply conditions.
“These metals are generally more volatile than gold, but their recent performance suggests demand pressures are broadening.”
Equities linked to the sector are reflecting similar dynamics. Gold mining companies posted a strong 2025, which has continued this year, with profit and return improving significantly. The precious metals and mining index on the JSE is up 287% over the past year.
Looking ahead, metals markets are expected to remain volatile, but the underlying drivers of demand remain intact. Luke said unresolved geopolitical tension, elevated government debt and concern over the independence of key institutions are shifting gold’s role from a short-term hedge to a core asset for managing risk in an unstable global environment.
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