Gold – which has jumped around 15% this year – is on an impressive run, but there are legitimate concerns about whether the momentum can last much longer.
The warning from Nigel Green, CEO of deVere Group, comes as the precious metal hits $5 500 this week amid intensifying geopolitical tensions, ballooning government debt, and a growing sense among investors that government bonds and major currencies are becoming increasingly politicised.
He says: “Gold’s surge reflects anxiety about fiscal policy, geopolitics, and the future of fiat currencies, but rallies driven by fear and momentum can reverse sharply.
“But one of the most significant underappreciated risks to the rally is the possibility that countries or central banks begin selling gold to manage fiscal or currency pressures.
“Gold remains one of the few unleveraged sovereign assets. For governments under political or financial strain, the temptation to liquidate reserves is real.”
The US sits at the centre of this risk. Federal debt continues to expand rapidly, with interest costs rising and political divisions limiting fiscal reform. President Donald Trump’s renewed tariff threats and assertive geopolitical posture have increased uncertainty around the policy outlook.
“In Washington, deficits and political gridlock, including a potential shutdown this weekend, make orthodox solutions difficult,” notes the deVere CEO.
“In a crisis, selling gold could be framed as balance-sheet management rather than issuing more debt.”
Europe faces parallel pressures. Highly indebted economies remain constrained by fiscal frameworks and aging populations, while Germany could face pressure to mobilize assets to stabilize the euro area during a future sovereign stress episode.
“Gold could become a politically palatable source of liquidity in Europe,” explains Green. “Systemic crises tend to override monetary orthodoxy.”
Emerging markets present another layer of risk. Countries managing volatile currencies and capital flows may sell gold to obtain hard-currency liquidity for intervention or to cover fiscal gaps.
“In periods of capital flight, gold becomes a tool of last resort. Several emerging economies already adjust reserves dynamically when markets turn against them.”
China and Russia represent a distinct category, Green adds. “Both have accumulated gold to reduce reliance on Western financial infrastructure, but sanctions, trade disruptions or domestic financial stress could still force asset mobilisation.
No country is immune to liquidity shocks. Strategic accumulators can become sellers under extreme pressure.
He warns that official sector selling would likely trigger sharp market reactions. “Central bank flows carry outsized signalling power.
“A sale by a major reserve holder would be interpreted as a statement about confidence in the monetary system, and markets react aggressively to statements.”
Beyond official selling, deVere Group highlights other reasons the current rally could lose momentum. Gold has benefited from a powerful momentum trade, with investors drawn to rising prices and media headlines.
“Momentum drives flows, and flows drive prices,” says Green. “When sentiment shifts, the same dynamic can work in reverse.”
He adds that gold’s reputation as a guaranteed safe haven is often overstated over short horizons.
“Gold is a strategic asset over long periods, but it is volatile and sensitive to interest rates, liquidity conditions, and risk sentiment.”
Green points to history as a warning for policymakers and investors alike.
“In 1999, the UK, under then-Chancellor Gordon Brown sold roughly half its gold near cyclical lows. Switzerland sold heavily after changing its monetary framework. European central banks coordinated sales to signal confidence in fiat currencies,” he explains. “Each episode preceded major shifts in the gold market.”
He also notes that earlier attempts by Western governments to suppress gold prices during the Bretton Woods era collapsed before the system itself broke down.
“History shows governments often misjudge gold cycles, and official selling can coincide with major market turning points,” Green says.
Political uncertainty continues to act as a tailwind for gold, particularly as investors reassess exposure to US assets and major currencies.
“Investors diversify when policy becomes less predictable. Gold benefits when confidence in fiscal discipline and monetary independence weakens.”
He concludes that investors should treat the current rally with caution.
“If governments or central banks begin selling gold, the rally could falter quickly as investors reassess the narrative. Official selling would confirm fiscal or currency stress and could trigger a rapid repricing.”
“Also, gold can climb fast when uncertainty rises, but it can fall just as quickly when sentiment shifts or yields become more attractive.
“Gold’s run reflects deep uncertainty, but uncertainty is not permanent. If policy stabilizes or reserves are mobilized, the market could see a sharp adjustment.
“Zooming out, there are legitimate and wide-ranging reasons why the current gold rally may end sooner than many expect.”