Physical gold posted an exceptional year of gains last year, adding more than 67% in value in US dollar terms over the period.
Such a strong run might have some gold holders feeling nervous about whether it's time to pocket their gains and look elsewhere for investment ideas, but according to MineLife director Gavin Wendt, the fundamentals for further strength in the gold price are still firmly in place.
Mr Wendt recently issued a research note looking into gold and said there are several tailwinds for the price of the precious metal, which should underpin further gains even after its "record-breaking rally" in 2025, which has seen gold double in value in less than two years.
Global uncertainty a tailwind
One of the big factors, often cited as an impetus for gold buying, is "macro uncertainty", Mr Wendt said – and keep in mind this research note was issued before the US' military strike on Venezuela in recent days.
As Mr Wendt wrote in his research note:
Gold has long reflected global economic and political stress, with its price typically rising during periods of heightened uncertainty. In the wake of the global financial crisis, gold surged past $1,000. During the Covid 19 pandemic, it climbed to $2,000. Then, when Trump announced tariffs in April, it surpassed the $3,000 mark. The $4,000 mark was hit during the recent prolonged US government shutdown.
Mr Wendt said global demand for gold remained strong, with World Gold Council figures showing buyer demand hit a record quarterly figure of 1313 tonnes in the third quarter of 2025.
This surge was driven by strong investment demand, including purchases via exchange-traded funds, bars and coins, as well as significant buying by central banks. ETF investors added 222 tonnes of gold holdings, marking the biggest quarterly inflow in years. Bar and coin demand remained robust at 316 tonnes. Meanwhile, central banks bought 220 tonnes, up nearly 30% from the second quarter, led by emerging markets.
Governments buying up
Mr Wendt said central banks remained a key pillar of support for the gold price, with China's central bank buying up gold for 13 months in a row and central banks overall adding a net 53 tonnes to global central bank reserves in October alone.
China is also attempting to widen its presence in the bullion market by extending gold storage facilities to foreign banks – an offer Cambodia has already accepted, signalling Beijing sees gold as more than a reserve asset, it's also a tool of financial influence.
Mr Wendt said despite the high gold price, supply growth "tends to be slow and relatively inelastic'', with various factors such as sovereign risk, permitting delays, and funding challenges to blame.
What we therefore see is that many cashed-up gold producers are happy to acquire existing projects to secure production growth rather than fund new projects, thus minimising risk.
Mr Wendt did not put a figure on how high he thought gold might go, but said the reasons previously mentioned "strongly suggests that this bull run has further to go''.
Downside risks include a major market sell-off, which could force investors to dump gold in order to raise cash. However, I expect the downside to be limited (to US$4,000/oz), as any weakness will likely attract renewed interest from both retail and institutional buyers.
