(Mike Maharrey, Money Metals News Service) Despite price volatility and the recent dip in gold prices, the Swiss Bankers Association says the yellow metal will continue to become more important as a store of value in an increasingly fragmented and politically uncertain global economy.
Swiss Bankers Association advisor for regulation and economics, Nina-Alessa Michel, said that headlines will likely drive continued volatility. However, gold’s trajectory will likely be determined “not only by isolated events but also by fundamental structural trends.”
“Against a backdrop of geopolitical and economic tensions and rising government debt, demand for safe investments is increasing.”
Those trends are fraught with uncertainty, making gold an excellent investment given its relative stability over the long term.
“Fluctuating inflation and changing interest rate expectations continue to favor demand for investments that tend to be stable.”
While gold has experienced significant price swings, especially since the outbreak of the Iran war, it tends to be much less volatile than other assets, especially during periods of geopolitical uncertainty.
Michel said that in the current environment, gold will likely have an even more significant role as a “strategic anchor” in investment portfolios and international reserves.
While current price volatility and worries about energy prices may slow central bank gold buying in the near term (Turkey recently sold more than 60 tonnes of gold), Michel said she expects central bank gold buying to remain robust in the years ahead.
“Geopolitical uncertainty will play a central role: the bigger the shifts in global balances of power, the more attractive gold will become as a strategic reserve. At the same time, gold’s importance for central banks will increase further as many of them seek to diversify their currency reserves and reduce their dependency on traditional hard currencies.”
That’s a nice way of saying central banks will continue to diversify away from the dollar as worries about the weaponization of the U.S. currency, coupled with fiscal irresponsibility, drive an accelerating de-dollarization trend.
Michel noted the robust demand for gold in 2025.
“In the first half of 2025 alone, Switzerland exported more than 476 tonnes of gold with a value of CHF 39 billion to the U.S., where uncertainty, inflation, and concerns over a further increase in government debt were pushing demand substantially higher.”
These dynamics all remain solidly in place and will likely be exacerbated by the Iran war, especially if it drags on.
Michel emphasized that the trajectory of monetary policy will be “a key influencing factor” in the direction of the gold price.
Price inflation concerns, as oil prices spike, have soured the market’s optimism on rate hikes. The conventional wisdom is that inflationary pressure will force the Federal Reserve to hold rates higher for longer.
There is even speculation that the Fed might raise rates. This has created significant headwinds for gold in recent weeks. However, this analysis ignores the Debt Black Hole in the middle of the living room. This puts central bankers in a Catch-22.
While they do need to keep monetary policy tight to tamp down inflation worries (not from oil price, but from money creation), they also need to cut rates to keep the debt-riddled, bubble economy inflated. At some point, it will have to choose between the economy and fighting inflation. Historically, central bankers have picked the economy – inflation be damned.
Michel concludes that gold will remain an integral asset in a broader investment strategy.
“Gold can be a central component of diversification, but only as part of an overall investment strategy. These days, stability stems less from individual asset classes than from forward-looking risk management that factors in geopolitical and regulatory developments.”
Michel’s analysis underscores a key point. Gold’s fundamental role is wealth preservation and monetary stability in a world of rapidly depreciating fiat currencies.
Headlines may drive the price, even causing significant swings, but they won’t change the underlying dynamics. Governments won’t suddenly stop printing money and debasing their currency.
Any swing in the gold price should always be analyzed within that context.
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
