The recent surge in gold prices has created a palpable sense of “FOMO,” or fear of missing out, among tradersAs gold continues to reach historic highs, many are beginning to view any retracement in prices as an opportunity to buyThis sentiment isn’t unfounded; numerous strategists suggest that gold prices still have room for growth, potentially driven by ongoing geopolitical tensions, persistent central bank demand, and a constriction in supply that is further elevating the price.

Since December of the previous year, the spot price of gold has been on a steady upward trajectorySignificant milestones have been reached as recently as Thursday, when prices soared past the $2,950 mark during European trading hours, setting a new recordAccording to data from the World Gold Council, this increase in price comes in the wake of a record-breaking global demand for gold in 2024. UBS strategist Joni Teves highlighted that an updated evaluation of market conditions has prompted the bank to revise its gold price forecast upwardsUBS now anticipates that gold prices could peak in the latter half of 2025, possibly exceeding $3,200.

The forecast from UBS suggests a gradual correction in gold prices after reaching their peak, predicting that the prices will stabilize at high levels for several yearsA key factor contributing to the rise in gold prices last year, which is expected to intensify in 2025, is the uncertainty surrounding the policies of the new U.S. president and their implications for the global economy and international relations.

John Reade, the senior market strategist at the World Gold Council, pointed out that the new administration’s policy changes, particularly the prospect of tariffs, have significantly altered the dynamics of the gold marketThe uncertainty surrounding the scope, timeline, and impact of these tariffs has compounded overall market risk, prompting investors to seek refuge in gold as a safe haven asset

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He elaborated that the second notable change in dynamics pertains to the movement of physical gold, coupled with rumors of a so-called gold shortageIt’s important to clarify that there isn’t a widespread shortage of gold; however, traders are preemptively shipping large quantities of gold to the U.S. to avoid potential import tariffs, creating a tighter supply in the London market and consequently raising borrowing costs.

Reade has also remarked that due to the prevailing uncertainty in markets and geopolitical landscapes, any interruptions in the gold market may persist for some timeThe “FOMO” sentiment expressed by traders reflects not merely a speculative urge but a reaction to the fear of missing timely and advantageous buying opportunitiesFollowing several short-lived buying sequences throughout 2024, investors may be reluctant to miss the chance to capitalize on any potential dips in gold prices this time aroundThis psychological factor tends to encourage active buying during price corrections, which ultimately limits the extent of those corrections and continues to propel gold prices higher.

The liquidity of the gold market is another critical aspect worth consideringDuring periods of heightened physical demand, the unique characteristics of the gold market can lead to limited trading liquidityThis lack of liquidity can amplify price fluctuations when the demand for physical gold spikes, thereby catalyzing further gains in gold prices.

Luciano Duque, Chief Investment Officer at C3 Bullion, has noted that the increase in gold holdings by central banks has shattered records for gold purchases over the last 15 monthsIn recent weeks, the Comex gold market has drawn particular interest, with a notable surge in delivery noticesIt appears that large institutional bodies are indeed ramping up their gold reserves—a signal that aligns with current market sentiments.

On the topic of gold stocks, analysts at RBC Capital Markets conveyed an optimistic outlook in a recent report

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