Is gold due for a correction?

While Gold’s run really began over 2024 with central banks around the world offloading some of their US dollars for gold and retail investors outside of North America buying gold, Rai notes that in 2025 North American retail and institutional capital flooded into gold, driving some of the dramatic price appreciation. Some of that was due to gold’s traditional role as a risk hedge amid significant changes to the global geopolitical order. The interest was enough to counteract some of the loss in demand from the jewellery manufacturing segment, which has a bit more of an elastic relationship to the price of gold.

More recently we have also seen significant appreciation in the price of silver, which Rai believes to be connected to the gold rally. He notes that with this run in silver, as well as some other precious metals, there are few places left for investors to turn for traditional risk hedges. He notes that US equities remain fairly expensive, and that fixed income rates are still tending towards higher yield. Moreover, the ongoing global rupture may be the most significant change since the Bretton Woods agreement, and precious metals provide an outlet to that theme, in his view.

In this environment, the means by which investors access gold matters a great deal. That could be via a basket of gold and precious metal mining equities, or through a vehicle like an ETF tied to a physical store of bullion. Rai argues that if an investor is seeking gold for diversification, then a bullion-exposed strategy offers better diversification long-term, in part because gold mining equities are still equities, and come with idiosyncratic balance sheet risk as well as a degree of beta to their stock market index.

That is not to say there is no risk in physical bullion exposure. Rai acknowledges that gold may be overbought at this point, and the relative ease by which investors can enter and exit gold positions through ETFs may add additional volatility to the price of gold. At the same time, however, he believes the persistent dynamics of geopolitical uncertainty and equity valuations ought to keep a degree of investment in gold.

Should those dynamics change, Rai may see a more fundamental realignment in gold. Namely, he notes, if US equity markets dip significantly and names move to more attractive valuations then some of the capital currently sitting in gold may be deployed to buy stocks. The other changing dynamic would be a return to more normal global trade dynamics. Both of those risks, he says, are second derivative risks and rely on a great deal of change. In the meantime, gold may correct but its underlying drivers should remain intact.