Today, we’re bringing you an overview of one of the most sought-after commodities in the world – gold. For millennia, gold has been used as currency, as a store of value, and with the dawn of the industrial age, in the production of many other, more complicated goods. With the huge uncertainty and changes we have seen in the last 20 years, the prices of gold have also surged – even outperforming many equity indices in certain years. In fact, in just the last 10 years, gold prices have grown by over 280%. To understand why, we examined the historical developments, key growth drivers, and outlined where gold could go next.
Gold began this century at approximately USD 290/oz, before falling to its 21st-century all-time low of USD 252-256 in April 2001. Since then, however, the commodity has experienced a spectacular bull run – rising over USD 1,000/oz during 2008’s financial crisis, growing to over USD 1.9k/oz in September 2011 – an almost 7.6x gain from the levels seen at the beginning of the century.
Gold price (2000 – 2025 YTD, USD/oz)
Source: Bloomberg, InterCapital Research
The 2010s, however, were not kind to gold, with its price remaining pretty stagnant throughout the 10 years. The key reasons here include:
- Firstly, the stabilization & growth of the global economies following the end of the 2008 GFC and in Europe, the 2011 debt crisis.
- Secondly, the extremely low-interest rate environment (negative in Europe), which made costs of debt/financing low, thus allowing for a spurring of investments into equity.
- Thirdly, there were no major wars or crises during the 2010s, with the ones that did occur (conflict in Eastern Ukraine, the many different conflicts in the Middle East) not having a huge influence on investor sentiment or gold prices.
It took gold until August 2020 to breach the USD 2,000/oz limit. When the pandemic first started in February/March 2020, gold did record depreciation, like other assets, as people started pulling more cash. However, the price stabilized quickly, reaching the USD 2,000/oz limit. Throughout the rest of the pandemic, the price remained largely stable, with a positive growth trend.
However, the pandemic wasn’t the only thing affecting gold prices during this period. Inflation, which was heavily influenced by the money printing, especially in the US & Europe, has led to a classic search for a safe haven – something that gold has been lauded as throughout its history. The war in Ukraine also added a dose of uncertainty on top. The war itself did not have a large and consistent impact on the gold prices; however, the reactions to the war did. The sanctions on Russia did not only include sanctions on individuals, companies, or the State itself. They also included a confiscation of app. USD 300bn of reserves that Russia holds outside of the country, primarily in Belgium.
This set a precedent – countries now knew that nothing was off the table in times of war, including the seizure of a sovereign state’s assets. Furthermore, this also hurt overall investments into US treasuries & bonds, as those could be seized at any moment if the purchasing country comes under sanctions. This has resulted in many countries diversifying away from the dollar and, in general, Western holdings. Gold, due to its limited supply, resistance to inflation & inability to be “printed” in large quantities, has fit this diversification drive perfectly. This dynamic can be seen in the central bank purchases.
Central banks’ purchases of gold (2010 – 2024, tons)
Source: Visual Capitalist, InterCapital Research
While the 2010 – 2021 central bank purchases of gold amounted to app. 473 tons/year, this accelerated to 1,136 tons in 2022 (+140% vs. the baseline, setting a new yearly record), 1,051 tons in 2023 (+122% vs. the baseline), and 1,045 tons in 2024 (+121% vs. the baseline). Due to this increase, in 2025, the central banks’ gold reserves (excl. the US Fed) have surpassed US treasuries as the % of share in the holdings for the first time since 1996.
The largest purchasers include China, Russia, India, Turkey, and smaller players like Poland or Singapore. The conflict in Gaza, starting in October 2023 and lasting until late 2025, also added another level of uncertainty. However, maybe the largest influence could be due to the US losing its financial dominance in the world. The combination of large fiscal deficits, federal debt now exceeding USD 38tn (vs. USD 27-28tn in 2020), and the broad use of sanctions against Russia has pushed the US into an increasingly fragile macro-financial position. Since the beginning of Donald Trump’s presidency, the steady expansion of tariffs on most trading partners has only added further strain to this already precarious situation. High inflation rates, still elevated in the country, have also increased the demand for gold, both from retail and larger investors.
Largest gold holdings, by country (2020 – 2025 YTD, tons)*
Source: World Gold Council, InterCapital Research
*According to estimates, China holds app. 12k to 13k tons of gold in addition to what is presented, “off-book”
While the dollar still remains the world’s reserve currency, it has depreciated significantly, losing, on average, app. 10% of its value compared to other currencies in the world during 2025. As most of the gold trading is done in dollars, this “technically” has also made gold purchases more affordable, thus leading to higher demand, especially from countries and investors outside the US.
US dollar index* (2000 – 2025 YTD, points)
Source: Bloomberg, InterCapital Research
*Measures the average FX rate of the dollar against a basket of currencies
Besides inflation, the response to inflation, i.e., interest rate changes, also played a role in the gold dynamics, albeit one that is opposite to what would usually occur. When interest rates are low, usually the inflation is also low in the country. During this period, gold is seen as a good investment, as yields on fixed-income assets are low. However, in the last couple of years, the connection was broken, as many of the factors we mentioned above had a stronger effect on the demand side than the interest rate environment could handle. As such, even in periods of high inflation & high yields, gold is still sought after.
It should be noted that gold is more closely correlated to the monetary expansion dynamics rather than direct CPI inflation. Research shows that the gold prices track M2 money supply growth more closely than CPI changes. With the Fed’s balance sheet growing from USD 4tn to USD 9tn during the pandemic, gold benefited from the currency debasement (even though in actual terms, we did not see much depreciation of the dollar; in fact, the opposite occurred, as compared to other currencies). As inflation & monetary expansion also affected other countries, and as the demand for dollars is still strong, the world was able to “absorb” the extra dollars, even though it caused a lot of inflation inside the country. Furthermore, through exports & the demand for dollars, it supported inflation in other countries as well.
Performance of select gold ETFs (2015 – 2025 YTD, points)*
Source: World Gold Council, InterCapital Research
*SPDR Gold Mini Shares price performance as of the ETF’s listing in June 2018, presented as 0 in the period before this
Lastly, investments in gold, through ETFs, have also surged in the last couple of years. In 2018, physically-backed gold ETFs held app. 2,440 tons of gold, up 3% YoY. 2019 saw a clear acceleration, adding 400 tons of gold, to app. 2.9k tons of gold at the end of 2019. During the pandemic, especially at its start in Q1 2020, app. 238 tons were added, the largest quarterly tonnage since 2016.
Some outflows were recorded in 2021-2023 (-173 tons and -110 tons in 2021 and 2022, respectively), leading to the entire holding of app. 3,236 tons in November 2023. This came due to the real yields rising, attracting investors back from gold. 2024, however, was a different story, as tonnage remained roughly unchanged YoY, while the ETF AUM rose 26% YoY to USD 271bn, entirely due to the gold price movement. H1 2025 continued the growth trend, adding 397 tons to the holdings, increasing it to over 3.6k tons, with an AUM of over USD 380bn. In other words, gold ETFs recorded an expansion in both the volume of holdings but also in the price of gold.
Taking all of this into account, how did gold actually perform relative to equity during the last couple of years?
Gold, select equity indices performance (2020 – 2025 YTD, %)
Source: Bloomberg, InterCapital Research
Relative to the observed indices, gold outperformed all of them, but this excludes dividends. Incl. dividends, SBITOP would outperform gold, and CROBEX10 would come close. This further supports the position that gold is a safe haven, especially in times of uncertainty, and should be a part of any investor’s portfolio. With the strong price growth gold recorded, however, one could wonder, is there any upside left to go?
While none of us can see the future, one could look at the drivers of growth. Of all the things we mentioned, most of them are still present to this day. Gold accumulation by central banks, ETFs, and retail investors continues. Inflation still remains elevated, although not to the same extent as before. Rate cuts, already done by the ECB, could still be done in the US. Uncertainty regarding the end of the war in Ukraine, as well as US tariffs, remains. In other words, the situation has not changed materially. One could say that the market has “priced in” all of these factors in the current price. However, markets are fickle, driven by sentiment. Any negativity or deterioration in any of these factors could accelerate gold accumulation. Even improvements in the situation, for example, if the war in Ukraine ended tomorrow, would not immediately affect gold prices, as other underlying reasons are still present. The US (and Europe’s) decision to seize Russian assets set a precedent – one that cannot be taken back. Furthermore, if the seized assets are used for reconstruction or financing of Ukraine, it would increase caution and decrease trust in the West by other countries, and the rate of gold accumulation could accelerate even more.
In other words, at the moment, the price might vary a bit, but if these trends continue, we should also see further price appreciation.