Gold at $4,000: Is the Bear Market Bottom Here?

In September 2025, gold prices surged to $3,870 per ounce, a record high driven by escalating geopolitical tensions and unprecedented central bank demand, according to a September 2025 gold price recap. As the market speculates on whether gold could breach $4,000, the question of a bear market bottom looms large. Historically, gold has demonstrated resilience during crises, but the current landscape-marked by persistent conflicts, dollar devaluation fears, and structural shifts in central bank behavior-suggests a paradigm shift rather than a cyclical correction.

Geopolitical Risk Premiums: A New Normal

Gold's role as a safe-haven asset has been amplified by geopolitical instability, a trend highlighted in a Discovery Alert analysis. The Russia-Ukraine war, Middle East tensions, and European political fragmentation have created a "risk premium" that investors are pricing into gold. For instance, Middle Eastern conflicts have disrupted energy supply chains, triggering inflationary pressures and eroding fiat currencies' purchasing power-points the Discovery Alert analysis emphasizes. Similarly, political instability in France and other European nations has driven allocations to gold-backed ETFs and physical bullion as a hedge against currency volatility, the analysis also notes.

This dynamic is not new. During the 2008 Global Financial Crisis and the 2020 pandemic, gold surged by 25% and 30%, respectively, as investors sought refuge. However, the 2025 surge is distinct: geopolitical risks are no longer episodic but systemic. Analysts at Equiti note that "the current environment resembles a permanent crisis state, where gold's demand is less about short-term panic and more about long-term portfolio rebalancing."

Central Bank Buying: A Structural Tailwind

Central banks have emerged as the most critical pillar of gold's bull market. In Q1 2025 alone, global central banks purchased 244 tonnes of gold, with Poland leading at 49 tonnes, according to market recaps. By year-end 2025, cumulative purchases surpassed 900 tonnes-a first since 1996, JM Bullion reports. This trend reflects a strategic shift away from U.S. Treasuries, driven by concerns over dollar dominance, U.S. fiscal health, and geopolitical sanctions, as earlier coverage has highlighted.

Emerging markets are at the forefront of this shift. China, Turkey, and India have significantly expanded their gold reserves, while BRICS nations and oil exporters are using gold to diversify reserves and insulate against Western financial systems. The World Gold Council highlights that central banks now prioritize gold for its "sanctions-resistant" properties and its role in preserving financial sovereignty.

This structural demand contrasts sharply with historical bear markets, which were often triggered by central bank gold sales or reduced geopolitical tensions. Today, central banks are net buyers, creating a floor for gold prices even as speculative traders rotate out of the asset.

Bear Market Reversals: What History Teaches Us

Historically, gold bear markets have occurred when real interest rates rise, the U.S. dollar strengthens, or geopolitical risks abate. For example, gold declined in the late 1990s as global conflicts eased and the dollar stabilized. However, the 2025 environment lacks these bear-case catalysts. The U.S. Federal Reserve's cautious approach to rate cuts and the dollar's erosion due to quantitative easing have kept real rates near zero, a point analysts have repeatedly noted. Meanwhile, geopolitical tensions show no signs of cooling, with conflicts in the Middle East and Europe persisting.

Experts argue that the current bull market is more resilient. "Gold's 2025 rally is underpinned by structural factors-central bank demand and geopolitical risk premiums-that are unlikely to reverse in the near term," a Discovery Alert commentary concludes. Even if short-term volatility occurs, the long-term trajectory remains upward.

Conclusion: A New Bull Market Paradigm

Gold's journey to $4,000 is not a speculative bet but a reflection of systemic forces. Geopolitical risk premiums and central bank buying trends have created a self-reinforcing cycle: instability drives demand, and demand reinforces gold's value. While bear cases require a confluence of easing conflicts, stronger economies, and higher real rates-conditions absent today-the current bull market appears entrenched.

For investors, the question is no longer whether gold will reach $4,000, but how to position for a world where geopolitical uncertainty and central bank actions define asset valuations. Gold's role as a hedge against both inflation and financial instability ensures its place in diversified portfolios, even as the market debates the bear market's bottom.