The bull run in gold seems to have hit a roadblock. In recent months, it was almost a one-way street. Gold prices climbed over $1,000 per ounce from August 2024 to touch the milestone mark of $3,500 in April 2025. That’s a 50% jump in just under 9 months.
But since then, gold has taken a U-turn, and the price reversal has been seen. Gold has fallen $250 and currently trades at $3,250, lower by over 7% from the all-time peak of April.
Has the tide really turned, and is gold on the way down, never to make another all-time high? Let’s explore.
There are at least 2 warning signs that show a reversal is bound to happen.
Gold/Silver ratio
The first clue may be offered by the Gold/Silver ratio. This ratio tells you the amount of silver it takes to buy an ounce of gold. Here’s the long-term chart showing how this ratio has oscillated:
If we look at the Gold/Silver ratio, it looks overstretched at current prices. Gold trades at $3,250 while Silver is at $32.5, which makes the Gold/Silver ratio stand at 100:1.
Gold/Silver Ratio: 30-year chart
Source: Macrotrends
Historically, this ratio has been close to 70:1. This means either the gold price has to fall or the silver price has to move up closer to $45 to maintain the long-term average.
Silver is not showing signs of moving up in a hurry yet, as we reported here.
Gold/Platinum ratio
The gold-to-platinum ratio has been in the range of 1 to 2 over the past two decades. Today, it stands at close to 3.5, indicating over-stretched valuations of gold compared to platinum. The multi-month high Gold/Platinum ratio indicates a fall in gold prices.
These two ratios suggest that gold’s outperformance may not be sustained without a correction, and a reversal in prices could be witnessed.
Factors leading to Gold’s Bull Run
Leaving technical factors aside, in layman’s view, gold is falling because investors have realized the high valuation of gold compared to other precious metals and are booking profits. But this happens when the factors that caused gold to spiral have actually changed.
Have the factors changed?
First, let’s see what factors led gold to rally over the last 2-3 years. A series of massive global events had a cumulative impact on gold prices. The geopolitical tensions spurred central banks to start hoarding gold in 2022-23. A lot of physical gold movement by banks was also observed, which sparked increased interest in gold accumulation among investors and global gold funds.
Gold was already running hot when Trump’s tariffs announcement in February 2025 threw more fuel on the fire.
Trump tariffs remain the primary reason that can make or break gold now. It seems Trump is to blame for the recent fall in gold.
Changing Scenarios
Gold is considered to be the God of Uncertain Times. A safe haven to turn to when there’s chaos in the economy and the central banks are running high on debt.
The recent turn of events seems to have arrested the dismal economic situation that the world was staring at. The Trump administration is aggressively negotiating with other countries, and the markets expect a lower tariff structure very soon. Trump’s tone has changed significantly, with hints of possible reconciliation with other trading partners in addition to China.
Also, the possibility of trade talks between US-China is on the table as Chinese authorities have indicated that the doors are open for negotiations with America.
In the hope that the economic tensions are easing, gold began to fall. Expect capital flows into equities or commodities linked to industrial growth as trade tensions ease.
Also, the US Dollar index has been under pressure and fell below 100, the lowest in three years. With Trump’s tariffs appearing to have less of an impact on the US economy than previously feared, the US dollar began to strengthen. It’s above 100 now, and gold is already facing selling pressure. Typically, a strong dollar is not a bullish signal for gold.
Will gold rebound again?
It’s difficult to predict. And in fact, one should stay away from predictions. However, making an informed decision is always better than taking a wild guess.
It’s still early days in the Trump tariffs imbroglio. Despite negotiations, it is anticipated that trade between countries will undergo significant changes. The economic impact is yet to be seen, especially in the US economy. If economic uncertainties re-emerge, gold has a reason to shine.
The US government currently owes over $36 trillion in federal debt. If the US defaults on its debt, which is a remote possibility, the entire financial system could collapse, leading to recession or even economic depression.
The other way to service debt is to devalue the dollar, which could also send conflicting signals to the global markets. In both scenarios, gold again has a reason to shine.
A more likely and near-term reason for the gold to resume its upward journey is the action awaited by the US Federal Reserve. The US economy is showing signs of weakness, with GDP shrinking 0.3% in Q1 and consumer confidence dwindling. The expectation is high that US Fed chief Powell will announce a rate cut in June if not in May’s FOMC meeting.
Gold has a negative correlation with interest rates and the dollar. If rates are lower and the dollar is weak, gold draws buying interest. Lower interest rates are also an advantage for Trump, as servicing the Federal debt is easier.
So, a lower interest rate scenario is a win-win for Trump and gold investors.
Summing Up
Gold is facing headwinds such as trade hopes, a stronger dollar, and stable equities. Gold may remain under pressure in the short term, but stalling trade deals or labor market weakness could prompt gold’s recovery.
Two major events are lined up for June that may push gold prices higher. One, the deadline for Trump’s ‘reciprocal tariffs’ is ending on June 9, after a 90-day pause effective April 9. Secondly, the US Fed FOMC meeting is on June 17-18, when the Fed is most likely to cut rates.
Expect consolidation in prices over the next few weeks. Any breakdown can be used as an opportunity to buy if you are a long-term investor. Unless the scenario and the reasons behind the bull run in gold change, gold as an asset class is looking to end 2025 by creating another all-time high record.
The gold rate today in India is Rs 92,820, much below the all-time high of Rs 1 lakh reached on April 22. Buyers of physical jewellery are finding a reason to buy gold now, while some investors could be buying the dip.
Remember, there are lots of ifs and buts while forecasting an asset’s outlook.
Keeping it sweet and simple is the best way forward.
Build a financial plan with a gold exposure of 5-10% of the portfolio, selling excess when it rises, and increasing it when it falls.
Also Read: Gold rate doubles in less than 3 years as gold price jumps 100% to Rs 1 lakh