Gold¡¯s ascent through $4,000 an ounce is yet another milestone in a three-year bull run that has defied die-hard skeptics and broken analytical models that have reliably predicted its rises and falls for decades.

Here is the story of how bullion shook off its reputation as a barbarous relic and muscled its way back toward the center of the global monetary system.

After being shunned by investors and central bankers for much of this century, gold¡¯s turnaround began in the panic of the pandemic, when it broke through $2,000 an ounce. The rally gathered fresh momentum in the wake of the invasion of Ukraine, with central banks and Chinese investors driving a 27% gain in 2024, before Donald Trump¡¯s return to the White House helped launch gold emphatically over the $3,000 hurdle in March.

In the latest leg of its blistering rally, almost every almost every major macroeconomic has lent gold a tailwind, with the U.S. government shutdown and a weakening dollar sending the market into overdrive.

Last month, gold also eclipsed its inflation-adjusted peak set more than 45 years ago, when prices topped out at $850. When gold hit that high in January 1980, the U.S. was grappling with a collapsing currency, a spike in inflation and an unfolding recession. The price had doubled over the previous two months, after U.S. President Jimmy Carter issued a freeze on Iranian assets in response to a hostage crisis in Tehran, raising the perceived risk of holding dollar assets for some foreign central banks. For some gold bulls, there are faint echoes of those conditions today.

Throughout the rally, central bankers have been a dominant force in the market, buying up bullion in such huge volumes that it prompted analysts and traders to build new models to keep track of this resurgent source of demand. The buying has been motivated by a drive to diversify away from the dollar and shield their assets from hostile nations ¡ª and while gold may never return to being the bedrock of the global monetary system it once was, the value of bullion has already almost certainly well surpassed the amount of Treasuries held by non-U.S. central banks in their foreign exchange reserves.

It¡¯s still well below the global foreign exchange reserves held in all dollar-denominated debt, but the rally also saw gold overtake the euro as the second-largest asset in the reserves of the world¡¯s central banks earlier this year. The rally has arguably been a boon for the U.S. as well, with the market value of its holdings surpassing $1 trillion last month ¡ª more than 90 times what¡¯s stated on the government¡¯s balance sheet.

As in 2024, Chinese buying was...