Gold to continue its rally as geopolitical shifts, central banks, and Basel III drive demand

Gold prices surged to record highs in the first quarter of 2025, as macroeconomic and geopolitical forces reshaped investor sentiment. The metal’s traditional role as a safe haven has been reinforced amid growing unease over U.S. trade policies, which have strained U.S. relations with the world and eroded confidence in the dollar and U.S. Treasuries.

Fueling the rally further is sustained demand from China’s central bank, which has steadily increased its gold reserves in a bid to diversify away from dollar-denominated assets. This strategic shift highlights a broader realignment in global asset allocation, particularly among emerging market economies.

Adding further momentum is a forthcoming change in U.S. banking regulation. From July 2025, gold will be reclassified as a Tier 1 capital asset under Basel III rules — aligning U.S. standards with global norms. Because gold will now be a Tier 1 capital asset, banks can operate with far less capital than when gold was classified as Tier 3. Under the new regulations, allocated (physical) gold will have zero risk weighting. This could significantly impact the gold market, driving up prices and contributing to the overall demand for gold.

Reflecting the bullish momentum, Visible Alpha consensus estimates show analysts have sharply raised their benchmark gold price forecasts for 2025 and 2026. This upward trend is evident in the average benchmark gold prices of 41 producers covered by Visible Alpha, including; Newmont (NYSE: NEM), Barrick Gold (NYSE: GOLD), Agnico Eagle Mines (NYSE: AEM), Anglogold Ashanti (NYSE: AU), and Zijin Mining (SSE: 601899).