Why does Gold price keep going up? Will I buy more gold or take profits?

There has been a LOT of interest in gold of late.

For good reason too – because gold’s price has gone up 28% in the past 2 months.

And gold in 2025 has delivered a mind blowing 60% returns.

While the S&P500 is up 14%.

You can basically buy a boring old lump of metal and outperform the S&P500 by 4x.

When gold does this well, it’s usually a sign of something deeper.

I haven’t talked about gold for a while now, so this article is probably way overdue.

This is an FH Premium article written a few weeks back that I am releasing to all readers – as there has been very active discussion about gold of late. If you found this useful, more premium articles like this, including my latest personal portfolio and stock watch are shared on FH Premium.

Gold Chart – price accelerated exponentially recently

You can see the chart of gold below.

Gold went from 2750 USD/ounce in Oct 2024, to 3400 in April 2025 (24% increase in 6 months).

It then traded sideways for 5 months until Aug 2025.

And in Sep 2025 gold began a meteoric rise, that saw gold go as high as 4350 USD/ounce at one point (28% increase in 2 months).

Even looking at the log chart below.

The current move of gold since Sep 2025 stands out because gold has made a huge move in a very short period of 2 months (28% increase in 2 months).

Whereas the previous rally in late 2024 played out over a much longer period (24% increase in 6 months).

You can see below that gold sits way above the 50 day moving average, making this move look overextended (did not get this overextended in the previous move).

What are the structural factors driving gold’s price?

I’ve talked about this in the past, and it’s been covered extensively in media of late, so I won’t dwell too much here.

2 key factors that drive gold’s price from a structural perspective:

Central bank demand

I said this back in 2022, and I’ll say it again.

History may not look kindly on the US decision to freeze Russia’s USD reserves after the Ukraine invasion.

Sure, you can argue the US had no choice.

But the net effect is that every central bank around the world sat up and suddenly realised – hey maybe my USD reserves are not truly as “safe” as I thought.

Yes maybe you are Europe and a close ally of the US.

But with Trump at the helm, do you really think any country in the world is safe?

And even if Trump goes, do you have any certainty whoever comes next will be any better?

If every central bank around the world decides that instead of holding 100% of future income in USD, they want to hold 10% of that in something other than USD, that is a lot of flow into an alternative asset.

And what alternatives assets are there?

Realistically – gold or bitcoin.

Bitcoin is slightly too controversial for central banks, hence gold has been the primary beneficiary so far.

Debasement of fiat currency

At the same time, it’s fairly clear that the path the US is on, is to run a fiscal deficit.

They will spend more than they earn, and hope to inflate their way out of the current debt situation.

Or to put it more simply, they are going to print a lot of money and debase the value of money.

You can see some of this reflected in the sharp drop in the value of the USD:

If you lose faith in the USD as a store of value, where would you park your money instead?

Well anything that you cannot easily print more of – gold, Bitcoin, stocks, real estate etc.

All of which have benefitted of late.

What is driving the current move in gold?

I plotted the chart of gold against the inverse of the dollar index below.

You can see how the rise of gold from late 2024 to mid 2025 was coupled with a depreciation in the USD.

And yet the recent move in gold the past 2 months – comes despite the USD staying flat.

In other words, gold’s rise in late 2024 came together with a depreciation in the USD.

The recent rise in gold price, comes despite USD staying flat.

This is very interesting, as it suggests that the recent price increase in gold isn’t directly linked to USD depreciation.

What then is driving the recent move in gold?

You could argue that the market is pricing in future money printing and future USD depreciation, that’s one way to see it.

But if this were true then you should expect to see a similar move in Bitcoin – but we don’t.

Look at the Bitcoin chart below – you can see that the past 2 months as the USD stayed flat, Bitcoin has continued to stay flat.

All while gold has had a massive 28% rally.

You could argue that the current move in gold has gotten ahead of fundamentals, and is a “bubble” due for a correction.

That’s possible, but then why is this not showing up in Bitcoin.

Bitcoin (blue) charted vs gold below, you can see how gold has shot up the past 2 months all while Bitcoin has stayed flat.

And that recent decline in Bitcoin, while gold continues higher?

Worrying to see this discrepancy in performance between gold and bitcoin.

One of the two is likely to be proven wrong in the months ahead.

Either gold is going lower, or bitcoin is going higher.

Own both Gold and Bitcoin?

For what it’s worth, I don’t have any easy answers to these questions, other than to note that Bitcoin and Gold today are different asset classes, and respond to different factors.

Bitcoin is the more risk-on asset class that trades like NASDAQ with certain characteristics of gold (like hedging money printing).

And gold is the more traditional store of value supercharged with structural central bank demand (and generally less correlated with other risk assets).

And if your gold is diversification and hedging against debasement of fiat currency, I think you want to own both.

What happens next to gold’s price?

In my time investing in markets.

I’ve come to notice that when the price of any asset accelerates exponentially like gold did the past 2 months.

There are usually 3 ways this way this plays out:

1. Stabilise – consolidate and trade rangebound for a period of time (like gold did from April to Aug 2025)
2. Accelerate higher (and eventually crash) – think dot com bubble, the higher and more exponential the price increase, the worst the crash on the other side
3. Crash – after a large price increase, the slightest news can cause a sell-off that quickly becomes self-fulfilling

Which of these will we see?

Which scenario are we likely to see with gold?

For what it’s worth, I don’t know the answer.

But what worries me is that I was talking to a friend recently, who does not generally keep up with financial markets, and is basically your definition of a mom and pop investor.

And he told me that gold’s price has been performing astoundingly well of late, and that analysts are projecting a move to 5000 USD/ounce.

Now that really got me worried.

You know how the saying about you know the top is in when the taxi driver talks to you about stocks?

It’s a cliché, but the reason why it works is that by the time the taxi driver is talking about stocks, this means that the marginal buyer is tapped out, and there are no new buyers to be found (only sellers).

So that comment really got me thinking – where are we in the move for gold?

Previously I would have been inclined to say that the 2 structural factors above (central bank demand and debasement of currency) mean that we could see further price gains for gold in the years ahead.

But this encounter stopped me in my tracks.

And recently I’ve been wondering whether it is time to start taking profits in gold.

Asset allocation benefits of gold

That said, the textbook answer, is that you want to own both gold and bitcoin in your portfolio to hedge debasement of fiat currency.

And of course the positions need to be volatility adjusted (as the volatility of gold is much lower than that for Bitcoin).

For plain vanilla investors this means you own more gold than bitcoin.

For more sophisticated investors this means you use leverage to buy gold to achieve the same volatility adjusted exposure to gold and bitcoin.

What will I do with my gold?

You can see my high level asset allocation breakdown on FH Premium.

Gold is almost 5% of my total net worth today, so no doubt I benefitted greatly from the recent price increase.

A good portion (actually the bulk of it) is physical gold.

With the recent parabolic move in gold – would I turn into a seller to lock in profits?

Frankly, I have not decided.

The very fact that this is physical gold and I need to pay 2-3% transaction costs to sell itself deters trading, and for me this was always meant to be a long term asset allocation position.

So maybe I just sit tight on my hands for now, and only sell if prices get really crazy (5000 perhaps)?

But hey I also remember thinking a year or two back that when gold hits 4000 USD/ounce I would be selling most of it, and here we are at 4000 and I want to continue holding.

Investing is funny like that.

Surveying Market Price Action – the not so good

What I do want to add though, is that red flags are starting to emerge in markets of late – if this keeps up, we may get a period of volatility.

US regional banks are a key barometer of US SME strength.

And things are not looking pretty with a break below the 200 DMA on very high volume.

Likewise – Private equity / private credit companies like Apollo / KKR are looking terrible – in a clear downtrend since late 2024 and nearing April 2025 lows:

Bitcoin too had an ugly week, breaking the 200 DMA (although it has since recovered and sits right on the 200 DMA):

I said recently that Ethereum may be in the process of topping out, and recent price action continues to support that thesis with a downtrend and failed breakout of the 50 DMA:

Altcoin market cap (crypto excluding BTC and ETH) is equally ugly.

It looks like after last week’s leverage flush out, risk appetite for crypto generally has dropped dramatically.

Meanwhile US 10 year yields close at 4.00%, the lowest since April 2025’s liberation day tariffs, suggesting a potential riskoff.

This does not bode well for risk appetite, and one wonders how long gold can continue to stay up when other risk assets are trading like this.

This is an FH Premium article written a few weeks back that I am releasing to all readers – as there has been very active discussion about gold of late. If you found this useful, more premium articles like this, including my latest personal portfolio and stock watch are shared on FH Premium.