Gold has popped through $5,000 an ounce – a celebratory moment for a commodity that has behaved more like a champagne cork than a “barbarous relic” these past two years.

On Sunday, the metal was within a whisker of the number, at $4,988 an ounce; on Monday it jumped to $5065. Silver’s performance is even more eye-catching: from $28 an ounce in January last year, it closed at $103 an ounce on Friday, and opened Monday at $107 – a fivefold increase in just one year.

The latest spurt is being attributed to dollar weakness, in part due to last week’s erratic US foreign policy pronouncements under President Donald Trump regarding his designs on Greenland. Not to mention the distrust brewing in Europe over the US’s commitment to its Nato allies.

But the more pressing question for those who have missed the bullion bus, not to mention those wondering when to cash out, is: will this rally end? How does it end, and where – if it ends – does the price fall to? After all, gold at more than $5000 is a gain of 183% in just two years.

“Most things revert to a mean: it’s called gravity,” says veteran mining analyst Peter Major drily. That’s not to say he believes a collapse in the price is imminent. But who is doing the buying at these levels is important.

“I think the higher it goes, the more you switch from value investors and fervent believers to speculators. I think a few [fund managers] were buying at $2,800 or $3,500; maybe they’re not selling but I bet they aren’t buying [here].”

Certainly, exchange traded funds (ETFs) – the main vehicles for retail investors – have been a major factor in gold’s run up, as has buying by the world’s central banks. Investors poured “unprecedented capital” into physically backed gold ETFs last year, according to the World Gold Council (WGC); annual inflows came to $89bn, the largest on record. Meanwhile, central banks, led by Poland, bought a further 45 tonnes of gold in November, following October’s 53 tonnes.

‘Brainless’ buying?

The former factor is cause for caution, argues Major. “It’s kind of brainless buying. Once money goes into an ETF they have to go out and buy the shares – doesn’t matter how pricey they are. That’s their job. So now you’ve got ‘mindless’ money coming into the market propping up these indices.”

The latter, though, should serve as something of a floor; all the market analysts Currency spoke to say it’s highly unlikely that reserve banks will dump their gold stocks any time soon.

But a good question to pose, reckons Major, is whether there will be more buyers or sellers if gold does fall back to, say, December’s levels of about $4,500 an ounce.

Asked what he thinks, Sibanye Stillwater’s head of corporate affairs, James Wellsted, also attributes the latest momentum to investment and ETF buying.

“I don’t think there’s a huge risk of the price pulling back to previous levels because the reserve banks are not going to sell those gold reserves. The selling is going to come on the margin from the ETFs and the speculators,” he says.

Sasfin’s David Shapiro, never much of a gold bull, reckons the price “will fall”, but says: “You can’t tell where or when. The gold market feeds on itself; it’s actually a very small market. The story runs out because you need to feed it all the time. You’re not getting a yield, and so it will unwind. Where does it unwind to? I don’t know.”

Asking yourself where the floor is, is probably as unknowable as it is futile, says Adrian Saville, professor of economics, finance and strategy at the Gordon Institute of Business Science.

“That’s the problem with gold: because it has no use value, the retracement could be anything. Let’s say Nato arrives at a quick and palatable solution on Greenland, Iran is resolved, Venezuela appoints a new government – where could gold go to? $1,000 an ounce,” says Saville.

“If you can tell me what the year 2035 looks like, I can tell you with a reasonable suspicion what the gold price [will be].”

The Trump factor

One thing is clear: the ructions caused by Trump are a major factor in gold’s march higher; Saville says the metal “really got its running shoes on from the inauguration of January 20 [2025]”.

“The correspondence between the policy uncertainty index and Trump is approximately one,” Saville tells Currency.

Whether the opposite is true too – that is, whether the gold price will fall if Trump’s power wanes – is anyone’s guess.

In its outlook for 2026, the WGC sums it up neatly: “If economic growth slows and interest rates fall further, gold could see moderate gains. In a more severe downturn marked by rising global risks, gold could perform strongly. Conversely, a successful outcome from policies set by the Trump administration would accelerate economic growth and reduce geopolitical risk, leading to higher rates and a stronger US dollar, pushing gold lower.”

While gold’s utility value other than as safe haven or lush piece of jewellery is questionable, silver has high utility value, says Saville.

“For the last five years there’s been a deficit in production. The place it’s going mainly into now is circuits and panels, so there’s very real demand for silver which makes it a slightly different story.”

For Saville, people should be thinking less about gold on the basis of price, and more on its function in a typical share portfolio. “It behaves beautifully as a portfolio diversifier,” he says.

The 90:10 rule

That’s because while a pure equity portfolio over long periods of time is “the best performing asset you could hold”, it is still subject to volatility.

“If you can dampen volatility by diversification, and you add 10% gold to a 90% equity portfolio, the 90:10 split over long periods performs better than a 100% pure equity portfolio – and this exercise was done before gold got its running boots on,” he tells Currency.

It’s a fascinating point, but surely buying anything at a peak price will hurt in the long run, too?

Well, says Saville: “When we arrive at 90:10 being the optimal portfolio, that is a period where gold moved from $35 to $800, back to $200; I’m not holding the gold to sell it at a higher price; I’m arguing that if you build a portfolio that has 10% physical gold, you can stop looking at the gold price.”