- but is it brilliance or a bubble ready to burst?

Former envoy warns: ‘This rally won’t last forever’

For the first time in decades, central banks now hold more gold than cash. Led by China, Russia, and emerging economies, the shift signals waning confidence in the U.S. dollar

“Gold’s rally has been extraordinary,” said Kananathan. “But fear-driven markets rarely stay rational for long.”

This level of momentum is unsustainable — a pullback is coming in the months ahead,” cautioned Ambassador V. Kananathan, former envoy and economic analyst

Gold fever has gripped the globe once again. The metal that built empires and calmed crises has smashed through $4,000 an ounce, its highest level in history — the boldest surge since the 1970s.  

But beneath the sparkle, some warn the shine may soon fade.  

 “This level of momentum is unsustainable — a pullback is coming in the months ahead,” cautioned Ambassador V. Kananathan, former envoy and economic analyst.  

The rally began when Washington’s tariff battles rattled global trade, reigniting economic anxiety. With the U.S. government temporary shutdown dragging into a second week and data releases stalled, uncertainty became the market’s only constant. In that chaos, gold — the eternal “safe haven” — became the global investor’s refuge. Spot gold hit $4,021 an ounce yesterday, as futures followed in lockstep. Analysts point to a toxic cocktail of geopolitical tension, a weakening dollar, and growing bets on interest rate cuts.  

“Gold’s rally has been extraordinary,” said Kananathan. “But fear-driven markets rarely stay rational for long.”  

For the first time in decades, central banks now hold more gold than cash. Led by China, Russia, and emerging economies, the shift signals waning confidence in the U.S. dollar.  

“When even central banks prefer metal over money, it’s a warning shot — sentiment, not stability, is running this market,” Kananathan warned.  

Gold-backed ETFs have already absorbed a record $64 billion this year. Dealers report retail demand has doubled. Yet history suggests that when small investors rush in at record highs, the correction is never far behind.  

“Everyone loves gold when it’s on the front page,” Kananathan quipped. “But euphoria usually marks the end, not the beginning, of a rally.”  

According to Kananathan, emotional buying, speculative trades, and algorithmic momentum have pushed prices beyond fundamentals.  

 “Once Washington breaks its gridlock or the Fed gives policy clarity, gold will correct toward sustainable levels,” he predicted.  

His advice: avoid panic buying, diversify portfolios, and lock in profits while sentiment remains sky-high.  

“Gold will always have its place,” he concluded. “But when the crowd starts calling it a one-way bet, that’s exactly when the tide turns.”  

Despite the excitement, Kananathan predicts that the market will cool by November.

“In my view, the United States will never allow the dollar to crash in the long term,” Ambassador Kananathan added. “Washington has too much at stake — the dollar remains the backbone of global finance, and any sustained collapse would shake the entire system.  

For now, gold glows brighter than ever — but even the brightest metal can melt under the heat of its own hype.