Bullion, long regarded as a reliable safe haven asset, has climbed to successive record highs amid escalating global political and economic uncertainty. The gold price surpassed $5,000/oz in late January, marking a series of new peaks.
More recently, prices strengthened further after the major US and Israeli strikes on Iran, with spot gold reaching $5,349.44/oz. This momentum builds on a 64% surge in 2025, fuelled by strong central bank purchases, substantial inflows into exchange-traded funds and expectations of imminent US monetary policy easing.
South Africa stands to benefit from the global gold price surge, which is expected to strengthen the mining sector and support the country’s trade balance, already reflected in the R23.2bn surplus recorded in December. The rise in gold prices stems from several reinforcing global dynamics, including the erosion of dollar dominance. This shift traces back to the post-Bretton Woods era and the longstanding US-Saudi petrodollar system which once underpinned global demand for the dollar.
As Saudi Arabia now sells oil in multiple currencies, global reliance on the dollar is weakening, contributing alongside additional structural and cyclical forces to the realignment that is driving the gold price upwards. These include heightened geopolitical uncertainty, intensified by renewed trade war risks and the reintroduction of tariffs, which have increased volatility in global import and supply chains. At the same time, escalating diplomatic strains involving the US, China, Russia and Nato allies have reinforced investor caution.
This environment has strengthened safe haven demand, particularly from emerging markets, alongside sustained gold accumulation by central banks. These dynamics are further supported by a weakening dollar, collectively underpinning gold’s renewed strategic and monetary appeal.
The dollar is now trading at a four-year low against a basket of other major currencies. By the end of 2025 China’s total official gold reserves had reached 2,306 tonnes (from 1,762 tonnes in 2015), accounting for about 8.5% of its total foreign exchange reserves.
Gold’s renewed strategic and monetary appeal is of profound interest as central banks have become key structural drivers of the gold market. From a position of marginal players in the past few years, central banks bought 863 tonnes of gold in 2025, far above historical averages. The gold buying spree has been driven by the developing economies, led by China, Poland, India and Turkey.
Gold’s renewed strategic and monetary appeal is of profound interest as central banks have become key structural drivers of the gold market.
Overall, their motivation includes reducing dependence on the dollar, protecting reserves from sanctions and currency risk, and long-term reserve diversification. Today, gold reserves have become an increasingly important safeguard for central banks, especially in emerging markets seeking to mitigate geopolitical risk and protect their financial systems against the implications of Western sanctions.
The current gold price calls for a reassessment of South Africa as Africa’s bullion processing and trading hub. Even as domestic output fell from historical highs, the Rand Refinery in Germiston remains one of the largest single-site precious metal complexes globally. It already processes significant third-country flows, and with record global demand and central bank buying as tailwinds to throughput, there is scope for cautious optimism.
The challenge of growing output of illicit gold from “zama zamas” needs policy attention to ensure South Africa’s hub role hinges on strict responsible sourcing and traceability, to avoid reputational and potential sanctions risks. With refining scale and brand recognition of the Krugerrand ecosystem, the country can capture more downstream margin: minted bars and coins, jewellery manufacturing and bullion-backed financial products for local savings.
The current gold price outlook is a positive development for South Africa as production costs are rand-denominated, while revenue is in dollars. With the spot price above $5,000/oz even mature, deep-level operations generate powerful operating leverage by improving uptime as Eskom power supply stability improves. This is critical because power reliability is the single biggest controllable determinant of underground mine operations and plant uptime.
South Africa can convert the current gold repricing into durable domestic value by scaling tailings treatment as the high rand gold price elevates sector cash flows with positive returns. The country’s century of mining left vast surface tailings with recoverable gold. Processing the tailings converts legacy liabilities into cash flow, with less safety risk than deep mining.
Since 2000 the spot gold price has risen more than 1,700% in nominal terms, the pricing realignment corresponding to identifiable shifts in monetary policy, geopolitics, financial stability and currency trust. The metal has transitioned from an inflation hedge to a geopolitical neutral reserve asset, one that carries no counterparty risk.
This presents scope to stabilise and modestly lift output of South Africa’s progressively declining gold output, which was at 100 tonnes in 2024 compared to 1,000 tonnes at its peak in 1970, when the average price was $35-$36/oz. Gold production decreased to about 400 tonnes in 2000 and to 100 tonnes by 2024 — a 90% decline from the 1970 production output. Today SA is producing less gold than Australia, Canada, China, Ghana and Russia.
While gold bars and airfreighted consignments are less reliant on rail infrastructure than bulk commodities such as coal, ongoing inefficiencies in rail and port performance continue to disrupt the timely delivery of essential inputs and reagents, with adverse implications for mining productivity, operational efficiency and overall sector performance. There is a need to accelerate the logistics recovery process in Transnet corridors to capture rising export demand.
It is fair to argue that the current gold price surge is not a speculative bubble, but a repricing of the role of gold in the global financial system due to elevated global debt levels; the momentum of geopolitical fragmentation; dedollarisation trends and declining trust in fiat currencies. Major banks now forecast a gold spot price above $6,000/oz in 2026, with some longer-term scenarios extending still higher if instability persists. Total global gold demand exceeded 5,000 tonnes in 2025, a historic record, thus reflecting strategic portfolio reallocation away from currencies and bonds toward hard assets.
A higher gold price directly boosts margins for South African producers, strengthens export earnings and reserves, and makes marginal shafts viable, provided projects are stress-tested against lower dollar prices and a stronger rand to avoid rapid reclosures when prices fall.
Current profit margins allow capital investments in exploration for new profitable greenfields projects over the life of mine. Increased value of gold exports will help stabilise the rand and support the national balance of payments.
• Dr Tshitereke, an honorary professor at Unisa’s Thabo Mbeki School of Public & International Affairs, is chief of staff at the mineral & petroleum resources ministry. He writes in his personal capacity.
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