What's Fuelling the Gold Rally and How Will it Impact Bitcoin?
Gold has once again seised the spotlight. In March 2025, the precious metal surpassed $3,000 per ounce for the first time in history - smashing through a psychological barrier that had held for decades. As of April 7, gold sits comfortably above that milestone, trading around $3,016 per ounce, up nearly 15% year-to-date and more than 28% over the past year.
So, what exactly is driving this historic rally—and how sustainable is it?
In this article, we'll explore the macroeconomic forces, geopolitical tensions, and investor behaviours fuelling gold's rise. As well as whether gold's momentum can last and how it compares to Bitcoin, which continues to assert itself as a modern store of value.
What's Behind Gold's Recent Rally?
To understand the surge in gold prices, it helps to look at both the hard data and the soft sentiment. SPDR Gold Shares (GLD), the world's largest gold ETF, is up 14.49% year-to-date, 28.85% over the past 12 months, and 3.43% in the last 30 days alone.
Several key drivers are at play:
Geopolitical instability: Tensions in the Middle East have escalated, with Israeli airstrikes in Gaza killing over 400 people in March and threatening a fragile ceasefire. Historically, gold tends to rally during periods of geopolitical unrest as investors flock to safe-haven assets that can hold value even in crisis scenarios.
Trade war fears: A growing wave of tariffs under US President Donald Trump has spooked global markets. Trump's proposals for tariffs on goods from Europe and Asia—including steel, aluminum, and alcohol—have rattled investor confidence. These policies have not only sparked fears of a global recession but also driven capital out of equities and into safe-haven assets like gold. This trend was further intensified by reciprocal tariffs introduced in early April 2025, which crashed equity markets worldwide.
Central bank accumulation: According to the World Gold Council, emerging market central banks—including those in China, Poland, India, and Kazakhstan—have been accumulating gold at record levels. These moves reflect a broader push for de-dollarisation and diversification following the 2022 seisure of Russia's foreign reserves. Simply put, central banks don't want to get caught holding assets that can be frozen or sanctioned.
Fed policy and interest rates: With the Federal Reserve expected to begin cutting interest rates as early as June, the opportunity cost of holding non-yielding gold is decreasing. Lower rates typically weaken the US dollar and make gold more attractive to investors seeking long-term wealth preservation.
Investor demand: Gold ETF inflows have surged significantly. ETFs like GLD have seen billions in new capital this year alone. Meanwhile, institutional investors and hedge funds have turned bullish, and even Chinese insurance companies are being greenlit to invest in gold—potentially unlocking tens of billions in new demand.
Together, these factors have created a perfect storm of upward pressure on gold prices.
Is the Current Gold Rally Sustainable?
While many of the fundamentals remain supportive, not everyone is convinced this rally has legs.
Economists at EFG Bank note that gold's recent price surge defies traditional valuation models. Their research found a cumulative estimation error of over 13% in recent months, even after accounting for variables like inflation expectations, real yields, ETF inflows, and central bank buying. In other words, gold may be overbought.
Goldman Sachs, however, sees more upside. The bank recently raised its year-end gold forecast to $3,250–$3,520, citing central bank demand and ongoing macroeconomic uncertainty. DoubleLine's Jeffrey Gundlach is even more bullish, suggesting a long-term target of $4,000.
Still, risks remain. A sudden resolution to the tariff standoff, a stronger-than-expected US economy, or higher interest rates could all sap momentum from gold. Jewelry demand—a major pillar of the gold market—might also weaken due to high prices, especially in countries like India, where gold plays a cultural and economic role.
Short-term profit-taking could trigger corrections, but the long-term drivers—particularly central bank policy and geopolitical stress—are likely to keep the metal's price elevated.
Gold vs. Bitcoin as a Store of Value
Gold's rally has sparked renewed debate over its status relative to Bitcoin. Has the original store of value asset reclaimed its throne? Or does Bitcoin still remain the digital gold?
While gold has gained over 14% YTD, Bitcoin has had a more volatile ride—dropping from a high of nearly $109,000 in January to $80,073 as of April 7, roughly a 26.5% decline from its all-time high and a 14.3% drop year-to-date. Critics argue that Bitcoin's sensitivity to risk-off environments and general market events, like stock investors' reaction to Trump's tariffs, undermines its safe-haven narrative.
While Bitcoin may not be the perfect safe-haven asset, it is a similar store of value as gold. In the long run, it can stay resilient to inflation and retain its value due to its deflationary halving mechanism and maximum supply cap.
According to VALR CMO Ben Caselin, the current gold rally might actually foreshadow a major explosion in BTC accumulation. Central banks hoarding gold signals growing distrust in fiat systems, and Bitcoin stands as the most credible digital alternative. "We cannot rule out that these movements are due to game theory around Bitcoin," Ben said. "The rally in gold could be a precursor for an explosion in bitcoin acquisition."
At the same time, Trust Machines COO Rena Shah calls Bitcoin "the only asset you'll never sell"—a nod to its growing status as a strategic reserve asset. Mithil Thakore, CEO of Velar, adds that Bitcoin has become more important than ever, both in perception and in practical adoption.
The Bigger Picture: What Gold's Rally Means for Bitcoin
Gold's historic rise above $3,000 is driven by a mix of global uncertainty, aggressive central bank demand, and shifting macroeconomic conditions. While questions remain about the sustainability of the rally, the fundamentals suggest gold's upward momentum isn't just a short-term fluke.
At the same time, Bitcoin's role as digital gold isn't being erased—it's evolving. As more institutions adopt BTC, and as it gains recognition as a hedge against not just inflation but fiat instability, its position as a modern store of value continues to strengthen.
Looking to diversify your portfolio with gold or Bitcoin? VALR makes it easy to access both.
Frequently Asked Questions
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Gold and Bitcoin are both seen as stores of value, with gold traditionally serving this role and Bitcoin being considered "digital gold." Gold’s rally can influence Bitcoin demand, as central bank gold accumulation signals distrust in fiat, which can drive interest in Bitcoin as an alternative.
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Gold is rising due to geopolitical instability, trade war fears, central bank accumulation, expectations of lower US interest rates, and increased investor demand.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
