Why Is Gold Price Rising? 7 Reasons Behind the Rally (Singapore Perspective)

Gold Price Milestones: The Timeline

In SGD terms, gold rose from roughly S$2,042/oz in January 2020 to over S$5,400/oz by mid-2026 — a gain of more than 160% in the currency that Singapore investors actually use.

7 Structural Drivers of the Gold Rally

1. Central Banks Are Buying at a Historic Pace

This is the single biggest driver that most retail investors underestimate.

Central banks globally bought over 1,000 tonnes of gold every year from 2022 to 2024 — the strongest three-year streak since the 1950s. In 2024 alone, central banks bought 1,045 tonnes.

The largest buyers in 2024:

• Poland: +90 tonnes (largest single buyer in 2024)
• Turkey: +75 tonnes
• India (RBI): +37 tonnes in H1 2024 alone
• China (PBoC): +44 tonnes in 2024, after adding +225 tonnes from Nov 2022 to Oct 2023

This is institutional, sovereign demand — not retail speculation. When central banks buy gold, they tend to hold it for decades.

2. The Russia Shock Changed Everything

In February 2022, G7 nations froze approximately $300 billion in Russian central bank USD reserves in response to the invasion of Ukraine.

This was a watershed moment. Every central bank outside the G7 immediately faced the same question: if we hold USD reserves, can our reserves be frozen too?

Gold cannot be frozen. It cannot be sanctioned. It has no counterparty risk. Since 2022, the de-dollarization trend has accelerated sharply, and gold is the primary beneficiary.

BRICS nations (Brazil, Russia, India, China, South Africa, and newer members) collectively hold over 6,000 tonnes of gold, around 20-21% of global central bank gold reserves. Between 2020 and 2024, BRICS central banks bought more than 50% of all gold purchased globally by central banks.

3. The US Dollar Is Weakening

The US Dollar Index (DXY) peaked at approximately 114 in October 2022 during the Fed's aggressive rate hike cycle. By 2025, the DXY had its worst performance in over 20 years, falling roughly 12.5% in the first three quarters of 2025, dropping from ~110 in January 2025 to ~96 by July 2025.

Since gold is priced in USD globally, a weaker dollar makes gold cheaper for every other currency — driving up demand and price.

But here's what's remarkable: in 2024, the DXY actually rose 7% — and gold still climbed +27% that year. The traditional inverse correlation between gold and the dollar is breaking down. Gold is rising even when the dollar is strong. That tells you the drivers are deeper than just currency moves.

4. US Debt Is Unsustainable

US national debt crossed $35 trillion on July 29, 2024. It crossed $36 trillion later that year. The US now spends more on interest payments annually than it does on defense.

This fiscal reality has two effects on gold:

• It undermines long-term confidence in the dollar as the world's reserve currency
• It increases the probability of future money printing (quantitative easing) to service debt — which is inflationary and gold-positive

Investors globally are losing confidence in paper currencies backed by governments running structural deficits. Gold, which cannot be printed, is the natural hedge.

5. Inflation — Even After the Rate Hikes

US CPI peaked at 9.1% in June 2022. The Fed raised rates aggressively in 2022-2023 to bring it down. But inflation has remained structurally above the 2% target in many economies.

More importantly, markets now expect that the next major shock — another pandemic, another financial crisis, another geopolitical event — will be met with another round of money printing. The playbook from 2008 and 2020 is well understood. Gold prices that playbook in.

Singapore's CPI has been more contained than the US, but imported inflation through the USD is real. Gold protects against both local and imported purchasing power erosion.

6. Geopolitical Uncertainty Is Structurally Elevated

Russia-Ukraine. Middle East conflict. US-China tech and trade tensions. Taiwan Strait tensions. These are not isolated events — they represent a structural shift from the relative stability of the post-Cold War "Pax Americana" to a more multipolar, contested world order.

Gold has historically performed best during periods of geopolitical uncertainty. Not because of speculation, but because it is one of the few assets that holds value across all political systems and cannot be frozen, confiscated, or defaulted on by any government.

7. Institutional and Retail Demand Is Rising

Beyond central banks, institutional investors have been adding gold through ETFs, futures, and physical holdings. Global gold ETF assets under management rose sharply through 2024-2025.

In Asia specifically — including Singapore, Malaysia, China, India, and Southeast Asia — retail demand for physical gold has surged. Cultural affinity for gold in Asia, combined with rising middle-class wealth and concerns about property markets and currency risk, is creating persistent structural demand.

Why This Specifically Matters for Singapore Investors

MAS Is Buying Gold Too

Singapore's own central bank, the Monetary Authority of Singapore (MAS), bought 76.5 tonnes of gold in 2023 — a 49.8% increase in reserves, bringing Singapore's gold holdings to an all-time high of 236.6 tonnes in Q1 2024.

In Q1 2023, MAS was the world's largest sovereign gold buyer, adding 68.7 tonnes in a single quarter. When the institution that manages Singapore's foreign reserves is aggressively buying gold, that is a signal worth paying attention to.

No Capital Gains Tax in Singapore

Singapore has no capital gains tax. Every dollar of gold appreciation is yours to keep. There is no need to hold for a minimum period, no ABSD equivalent, no stamp duty on gold purchases. The tax treatment could not be more favourable.

SGD Is Strong, But Gold Is Stronger

The SGD is one of the world's most carefully managed currencies. MAS uses the SGD exchange rate as its primary monetary policy tool, which keeps Singapore's inflation lower than most other countries.

But even with a strong SGD, gold has significantly outperformed. Gold rose from roughly S$2,042/oz in early 2020 to over S$3,583/oz by January 2025 — a gain of more than 75% in SGD terms over five years. By mid-2026, gold in SGD was trading around S$5,400-5,800/oz, representing a gain of over 160% from 2020.

Gold's gains in SGD are not from currency weakness — they are from the structural drivers above. Singapore investors get these returns without the currency risk amplification that Malaysian (MYR) or Indonesian (IDR) investors experience.

What Major Banks Are Forecasting

These are not fringe predictions. These are from the research desks of the world's largest financial institutions. The common thread across all of them is that the structural drivers — central bank buying, dollar weakness, US fiscal deterioration, de-dollarization — are not going away.

Disclaimer: Analyst price targets are projections, not guarantees. Gold prices can and do fall in the short term. Past performance is not indicative of future results.

How Much Gold Should Singapore Investors Hold?

Most financial planners suggest 5–15% of a portfolio in gold as a hedge and store of value.

A useful reference: Ray Dalio's All Weather Portfolio allocates 7.5% to gold. A 10% allocation on a S$100,000 portfolio — just S$10,000 in physical gold — would have returned roughly S$7,500 over the last five years based on gold's SGD performance.

For Singapore investors, gold is accessible through:

• Physical gold dealers: Public Gold (Malaysia-based but accessible), BullionStar (Singapore), UOB gold bar
• Bank gold accounts: UOB Gold Savings Account, DBS Multiplier gold option (check Shariah compliance if applicable)
• Gold ETFs on SGX: SPDR Gold Shares (GLD) or iShares Gold Trust

For Muslim investors in Singapore, physical gold is the clearest halal option. Gold ETFs and bank gold accounts have varying Shariah rulings — see our guide to halal gold investment in Singapore.

The simplest starting point: buy a small amount of physical gold today and watch how the structural forces above play out over the next 5-10 years.