Why Is Gold Hitting Record Highs in 2025?

Gold has been on a remarkable run in 2025, surging approximately 40% year-to-date and recently reaching an all-time high analysis of $3,702.95. This impressive performance has prompted Deutsche Bank to significantly revise its price outlook for the precious metal. But what factors are driving this bullish sentiment in the gold market?

Central Bank Purchasing Remains Robust

Central banks worldwide continue to accumulate gold at an extraordinary pace, with official demand running at twice the level of the 2011-2021 average. China has emerged as a particularly aggressive buyer, helping to sustain strong fundamental support for gold prices despite already elevated levels.

The ongoing central bank buying represents a significant shift in global monetary reserves management, with many nations seeking to diversify away from traditional foreign currency holdings.

Federal Reserve Policy Shifts Creating Tailwinds

Deutsche Bank analysts point to several monetary policy factors supporting their revised forecast:

These monetary policy dynamics typically benefit non-yielding assets like gold, which performs well in low-interest-rate environments.

Historically, gold has shown strong inverse correlation with real interest rates, making the anticipated Fed policy trajectory particularly supportive for bullion prices.

What’s Behind Deutsche Bank’s New $4,000 Gold Forecast?

Substantial Upgrade from Previous Projections

In a significant revision, Deutsche Bank has raised its 2026 gold price forecast by $300 to an average of $4,000 per ounce. This represents an 8.1% increase from their previous projection of $3,700 announced earlier in 2025.

The upgraded forecast follows multiple upward revisions from the bank over the past 18 months, reflecting the persistent strength in gold prices despite earlier expectations of a correction.

Supply Constraints Adding Support

The bank noted that recycled gold supply is currently running 4% below expected levels this year, which removes a potential ceiling on price appreciation. With limited new mine supply coming online and recycling activity subdued despite high prices, the supply-demand balance continues to favor higher prices.

Gold mining companies have been cautious about expanding production capacity following previous boom-bust cycles, resulting in relatively constrained new supply despite multiyear price increases.

US Dollar Weakness Expected

Deutsche Bank’s analysis suggests potential US dollar weakness ahead, which historically correlates with stronger gold prices. As the dollar potentially loses value against other major currencies, gold becomes more attractive as an alternative store of value.

The negative correlation between gold and the US dollar has been a consistent market pattern, with currency depreciation often coinciding with bullion appreciation.

What Risks Could Derail the Gold Rally?

Equity Market Competition

Strong performance in global equity markets could potentially divert investment flows away from gold. When stocks deliver robust returns, the opportunity cost of holding non-yielding assets like gold increases.

The historical relationship between gold and equities has been complex, with periods of both correlation and divergence depending on prevailing economic conditions and investor sentiment.

Seasonal Weakness Patterns

Deutsche Bank highlighted that gold has historically shown seasonal weakness during the fourth quarter, based on both 10-year and 20-year trend analysis. This cyclical pattern could create temporary headwinds for gold prices.

The seasonal pattern typically shows:

Federal Reserve Policy Uncertainty

If US economic conditions remain resilient, the Federal Reserve might hold rates steady in 2026 rather than continuing to cut as markets currently anticipate. Such a scenario would likely be less supportive for gold prices than Deutsche Bank’s base case.

Recent economic indicators have been mixed, creating genuine uncertainty about the future path of monetary policy:

How Are Other Precious Metals Affected?

Silver Forecast Also Upgraded

Alongside its gold revision, Deutsche Bank also raised its silver price forecast for 2026 to an average of $45 per ounce, up from its previous target of $40. This represents a 12.5% increase in the bank’s outlook for silver.

The bank’s silver upgrade is particularly notable as it represents a more aggressive percentage increase than the gold revision, suggesting expectations for potential outperformance in the industrial/precious metal.

Gold-Silver Ratio Implications

The revised forecasts imply a gold-to-silver ratio of approximately 88:1, suggesting Deutsche Bank expects gold to maintain its relative strength compared to silver, though with silver still posting significant gains.

Historically, the gold-silver ratio has averaged around 60:1 over the long term, indicating:

What Does This Mean for Investors?

Portfolio Allocation Considerations

With gold already up approximately 40% year-to-date in 2025 and potentially heading toward $4,000 per ounce, investors may need to reassess their precious metals allocation. Deutsche Bank’s forecast suggests additional upside potential despite already strong performance.

Investment strategies to consider include:

Mining Company Investment Opportunities

Gold mining companies typically experience operating leverage to rising gold prices, potentially amplifying returns compared to the metal itself. As production costs remain relatively stable while gold prices rise, profit margins for well-positioned miners could expand significantly.

The mining sector presents several interesting dynamics in the current environment:

Timing Entry Points

Given the seasonal patterns noted by Deutsche Bank, investors might consider whether fourth-quarter weakness could present more favorable entry points for establishing or adding to gold positions.

A strategic approach might include:

How Does This Forecast Compare to Historical Gold Performance?

Historical Context for $4,000 Gold

A $4,000 price target would represent a new paradigm for gold, which only crossed the $2,000 threshold relatively recently. When adjusted for inflation, however, gold’s 1980 peak would equate to approximately $3,500 in today’s dollars, suggesting the metal is entering historically significant territory.

The progression of gold’s major price milestones shows the acceleration in recent years:

Recent Price Acceleration

Gold’s price appreciation has accelerated notably in 2025, with the metal gaining approximately 40% year-to-date. This rapid ascent follows years of consolidation and suggests a potential regime change in how investors value the precious metal.

The current rally has been characterized by:

What Broader Economic Signals Does This Send?

Inflation Expectations

Gold’s strong performance and bullish forecasts may reflect persistent concerns about long-term inflation despite central bank efforts to control price increases. The metal has historically served as a record highs & inflation hedge during periods of currency debasement.

Current economic indicators present a mixed picture:

Geopolitical Risk Premium

Rising gold prices often incorporate a premium for geopolitical uncertainty. Deutsche Bank’s elevated forecast may partially reflect expectations for continued or increased global tensions through 2026.

Gold tends to perform well during periods of:

Monetary System Evolution

Central banks’ aggressive gold purchasing, particularly from nations seeking to reduce dollar dependence, signals ongoing evolution in the global monetary system. Deutsche Bank’s gold price forecast suggests this trend will continue to support gold prices.

Recent developments include:

Read the full article HERE.

Gold prices rose Tuesday, climbing to fresh record levels as investors remained confident of a U.S. Federal Reserve interest rate cut later this week.

At 08:15 ET (12:15 GMT), spot gold edged 0.4% higher to $3,693.97 per ounce, after hitting a record peak of $3,699.57 earlier in the session, and U.S. gold futures for December were up 0.3% to $3,730.92/oz. 

Bullion jumped 1% in the previous session, surpassing record levels notched last week.

“Gold prices have surged more than 40% so far this year amid Trump’s aggressive trade policy, conflicts in the Middle East and Ukraine, and central bank buying,” said analysts at ING, in a note.

Gold scales fresh high on Fed easing bets

This rally was underpinned by widespread market belief that the Fed will deliver a 25-basis-point rate cut at the end of its September 16-17 meeting, its first since December 2024.

A weaker U.S. dollar, trading near one-week lows, added further support.

Political developments in Washington also bolstered metal’s safe-haven appeal.

The Senate confirmed Stephen Miran, Trump’s economic adviser, to the Fed Board of Governors. Investors viewed the appointment as a sign that the central bank could face even more pressure to align with White House policy.

Separately, a U.S. appeals court blocked President Donald Trump’s attempt to remove Fed Governor Lisa Cook, meaning she would likely attend this week’s Fed meeting. President Trump is expected to take the matter to the Supreme Court.

Commerzbank lifts gold price forecasts

Analysts at Commerzbank have lifted their forecast for gold prices by the end of the year, citing predictions for “slightly more” future Federal Reserve interest rate cuts than markets are currently pricing in.

In a note to clients, the analysts led by Carsten Fritsch said they now expect gold prices to stand at $3,600 per troy ounce this year and at $3,800 by the conclusion of 2026 — $200 more than their initial outlook, respectively.

Policymakers are tipped by Commerzbank to roll out 75 basis points of rate reductions over the rest of the year and a further 125 bps in cuts in 2026 — marginally above the level indicated by Fed Funds Futures. Interest rates now stand at a target range of 4.25% to 4.5%.

Copper retreats from 15-month peak

Elsewhere, Silver Futures were up 0.8% to $43.29 per ounce, while Platinum Futures gained 0.4% to $1,423.45.oz.

Benchmark Copper Futures on the London Metal Exchange fell 0.2% to $10,147.00 a ton, after hitting a 15-month high of $10,192 a ton in the previous session.

U.S. Comex Copper Futures fell 0.2% to $4.7085 a pound.

“Recent reports suggest that Chile expects production to grow this year and next, targeting a record 6 million tons by 2027, despite setbacks at two major mines (owned by Codelco and Teck Resources), offering some relief to a tight global market,” said ING.

U.S. and Chinese officials held a fresh round of trade talks in Madrid, led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer on the U.S. side, and Vice Premier He Lifeng and negotiator Li Chenggang for China.

The discussions produced a framework deal on shifting ownership of TikTok’s U.S. operations, with Presidents Donald Trump and Xi Jinping expected to speak later this week to confirm the terms.

Easing trade tensions between the two world’s largest economies could provide a boost to industrial metals.

Read the full article HERE.

A 39% price jump this year outpaces Covid-19 pandemic, 2007-09 recession

Kenneth Pack invested in gold for the first time in April to shield himself from what he saw as the disorder of the new Trump administration. The chaos trade was just heating up.

Even after the stock market recovered from Trump’s “Liberation Day” confusion and rose even higher, investors such as Pack have kept plowing money into the precious metal. The Nevada retiree plans to keep holding precious metals and stocks linked to them, which comprise 17% of his portfolio.

His reasons include the stop-and-start policy rollouts that have at times included several tariff changes in a day.

“Strangeness seems to be the new norm,” Pack said.

A modern-day gold rush is stretching from Costco store aisles to underground vaults in London to the flickering screens of Wall Street. Old jewelry now glimmers with potential dollar signs.

Gold’s value has ballooned by 39% this year, putting it on track for a greater annual price jump than during the depths of the Covid-19 pandemic or 2007-09 recession, according to Dow Jones Market Data. Futures for the precious metal haven’t surged so much in a year since 1979, when a global energy crisis fueled an inflationary shock that thrashed the world’s economy.

These days, it isn’t a financial meltdown that is drawing people to one of the original market refuges. The recent run-up to record prices—reaching $3,649.40 a troy ounce on Friday—instead stems in part from the White House, with investors big and small rushing to shield themselves from an uncertain outlook for the U.S. economy and its role in the world.

President Trump’s attempt to reorder global trade has buoyed inflation and scrambled economic forecasts. A White House pressure campaign against the Federal Reserve is threatening the independence of one of the financial system’s bulwarks. The U.S. dollar by one measure had its weakest first half of the year in more than five decades.

On top of it all, the president has made little progress in ending wars in Ukraine and elsewhere that have periodically upset markets. 

“With Trump in the U.S. and [Vladimir] Putin in Russia, a lot of people think: Is this going to get worse?” said Sean Hoey, managing director of IBV International Vaults London.

Operating from a Victorian mansion just steps from Hyde Park, the company has recently seen a surge of wealthy customers hoping to stuff gold into the hundreds of safe-deposit boxes in its subterranean, steel-encased vault. IBV’s in-house trading arm buys gold from the Royal Mint and other certified sources, Hoey said, allowing clients to hold and sell the metal without it ever leaving the building.

“The majority of people right now are buying and thinking it’s going to go up more, rather than selling,” he said. IBV next year plans to roughly double the number of boxes it offers to keep up.

Gold’s run-up began almost three years ago, fueled by central banks and Chinese investors loading up on bullion.

But Westerners have helped drive the rally this year in part by piling into exchange-traded funds. The net assets in U.S. ETFs linked to physical gold have ballooned 43% since January, according to Morningstar Direct, with March and April seeing two of the three-biggest monthly inflows since at least 2014.

Gold prices took another turn higher in August after Federal Reserve Chair Jerome Powell signaled the central bank would begin cutting interest rates at its meeting this week. Speculators piled in. In the short term, lower rates could make gold, which pays no interest, more appealing relative to safe government bonds.

Saxo Bank’s head of commodity strategy, Ole Hansen, said hedge funds by early September had parked 47% of their net commodity holdings in gold.

Lower rates could propel the precious metal in another way. Analysts warn that cutting rates in an economy with low unemployment and above-target inflation may also lead to longer-term price pressures that would erode profits and boost borrowing costs.

Investors’ ultimate fear is a mixture of high inflation and slow growth similar to what fueled gold prices’ meteoric 1979 rise. 

“The risk of the s-word—stagflation—has increased,” said Aakash Doshi, head of gold strategy at State Street Investment Management. “That is a perfect environment for gold.”

Renewed confidence in U.S. growth and the dollar’s role as a reserve currency could tarnish the rally. But given trade tensions and America’s retrenchment from the world, Doshi said, “that seems very tenuous.” 

Investors haven’t lost their appetite for risk in that new world—the AI-crazed stock market is at records—but instead are hedging their bets with investments not denominated in weakening dollars. 

“Trump has been positive for gold,” he added.

On Main Street, where surveys show consumers are increasingly downbeat, more Americans are now handing over their gold to jewelry stores or repair shops to be melted down and sold.

“The value is not in the artistry,” said Lark E. Mason Jr., an appraiser based in Texas and New York. “It’s in the material.”

Even the Trump family has gotten in on the action. Donald Trump Jr., whose father has redecorated the Oval Office with golden flourishes, has in recent months appeared in online ads for a company that helps customers convert retirement accounts into gold. 

Advising viewers to reach out for a free consultation, he said in an ad shared on Instagram, “What do you have to lose?”

Read the full article HERE.

Gold has eclipsed its inflation-adjusted peak set more than 45 years ago, as growing anxiety about the US’s economic trajectory takes bullion’s blistering three-year bull run deeper into uncharted territory.

The spot price of gold has surged about 5% so far this month, with prices hitting an all-time high of $3,674.27 an ounce on Tuesday. It’s set more than 30 nominal records already in 2025, but the latest leg of the rally has also taken it through an inflation-adjusted peak set on Jan. 21, 1980, when prices topped out at $850.

Factoring in decades of consumer price increases, that equates to about $3,590 — although there are multiple methods of adjusting for inflation, and some would put the 1980 peak at lower levels. It’s a moving target, but analysts and investors are in agreement that gold has now shot firmly through it, providing a further fillip for gold’s credentials as an age-old hedge against rising prices and weakening currencies.

“Gold is a very unique asset in its historical ability over hundreds — if not thousands — of years to play that role,” said Robert Mullin, portfolio manager at Marathon Resource Advisors. “Asset allocators are entering a period where they are justifiably concerned about the levels of both deficit spending, as well as questioning central banks’ priorities and willingness to truly fight inflation.”

The precious metal has risen nearly 40% this year as President Donald Trump has cut taxes, expanded his global trade war, and sought unprecedented influence over the Federal Reserve. A selloff in the dollar and long-term US government bonds earlier this year highlighted concerns about waning appetite for American assets, and fueling questions about whether the nation’s debt remains a haven in times of turmoil.

When gold hit $850 in January 1980, the US was grappling with a collapsing currency, a spike in inflation and an unfolding recession. The price had doubled over the previous two months, after US 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.

“Gold is only reflecting the renewed awareness that inflation can be and still is a problem, but also uncertainty about the world,” said Carmen Reinhart, a former senior vice president and chief economist at the World Bank Group. Gold’s “role as an inflation hedge was a stamp of its popularity in the 70s and 80s, but you need to look before the 1980s: Gold has always played an important role when there’s uncertainty.”

Compared with the parabolic surge to the peak in 1980 — and a precipitous collapse that followed — today’s rally has unfolded with far less volatility. That’s partly because today’s market is far more liquid and accessible to investors, and also because it’s attracting a broader base of investors who are offsetting weakness in traditional areas of demand.

Thanks to the surge in prices, the value of bullion held in London vaults exceeded $1 trillion for the first time last month, and it’s also overtaken the euro as the second-largest asset in global central bank reserves.

Grant Sporre, global head of metals and mining at Bloomberg Intelligence, has overhauled his analytical models to take fuller account of the broad and diverse drivers behind gold’s stellar rally. They suggest gold is over-priced relative to historical norms except in one crucial aspect: Compared to US stocks, gold still looks cheap, and he says prices could vault higher still if equity markets start to creak.

“Gold’s eye-wateringly expensive, but the market is happy to pay the price in order to secure that insurance,” Sporre said.

Gold’s Comeback

It’s a striking comeback for an asset that was derided by central bankers throughout the 1990s and 2000s, as the end of the Cold War, the birth of the eurozone, and China’s accession to the World Trade Organization ushered in a new era of globalization underpinned by the dollar. As stock markets took off, many private investors turned their back on gold too.

This time, many central banks are again buying gold to diversify their foreign exchange holdings from the dollar, and insulate themselves from sanctions targeting America’s adversaries. Prices have almost doubled since Russia’s invasion of Ukraine and a resulting freeze on the Kremlin’s overseas assets, with the rally broadening out as institutional investors started loading up in the wake of Trump’s inauguration.

Sporadic buying sprees in China and a resurgence in the popularity of exchange-traded funds — which have made gold more accessible to retail investors — have also lent support along the way.

“The movement from a unipolar world to a multipolar world I think has accelerated the view of gold as being an asset that central banks want to own,” said Greg Sharenow, a portfolio manager at Pacific Investment Management Co. “High net worth individuals have been viewing it similarly, and gold has been a big beneficiary of the broadening and the diversification of assets.”

Over the past two weeks, prices have erupted higher again, shooting clear of all-time nominal highs set in April after a spell of range-bound trading. The latest breakout has come as investors across financial markets bet that the Fed will soon start lowering interest rates off to head off a slowdown in hiring and and a potential economic downturn.

Historically, rate cuts have boosted gold’s appeal relative to yield-bearing assets like Treasuries, while also putting pressure on the dollar. And with Trump staging an unprecedented assault on the Fed’s independence, gold bulls are also increasingly alert to the possibility that the central bank could be compelled to cut rates aggressively even in the face of rising inflation risks.

When similar dynamics took hold in the early 1970s — with the dollar slumping as then-President Richard Nixon pressured the Fed to keep rates low in the face of inflation risks — it helped kick-start a colossal rally in gold, with the twin oil shocks of that decade helping to ultimately lift it to its $850 peak.

“I could read what was happening in the world: Every country was building up huge debt, every country was printing money and debasing their currency,” said Jim Rogers, the co-founder of the Quantum Fund alongside George Soros, who began buying bullion in the early 1970s. “And I also read enough to know that gold and silver were a way to protect yourself in times like that.”

Read the full article HERE.

Inflation edged higher in August, government data showed Thursday, as investors looked for signs of how much President Trump’s tariffs are filtering into consumer prices and what that means for how aggressively the Federal Reserve will cut interest rates.

The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 2.9% annually in August, a rise from July’s 2.7% increase and on par with economist expectations.

Month over month, prices rose 0.4%, an uptick from July’s 0.2% increase and higher than economists’ expectations of a 0.3% monthly gain. The rise was driven by stickier gasoline prices and firmer food inflation.

Core inflation, which strips out volatile food and energy, rose 3.1% year over year in August, unchanged from July and in line with estimates. On a monthly basis, core prices climbed 0.3%, matching July’s increase, which was the strongest monthly rise in six months.

CPI report ‘trumped’ by jobless claims

Tuesday’s report arrives as the Fed debates its next interest rate move. Despite stickier prices in August, markets still expect the Fed to deliver a quarter-point cut at next week’s policy meeting, according to the CME FedWatch tool.

Odds of a larger half-point reduction have risen in recent days, especially after preliminary benchmark revisions showed the US economy added 911,000 fewer jobs in the 12 months through March 2025 than initially reported.

Fresh data on Thursday added to the picture of a cooling labor market, with weekly jobless claims rising to 263,000 — the highest in nearly four years, up from a revised 236,000 the prior week and well above economist expectations for 235,000.

Following the release, traders priced in a roughly 88% chance of a quarter-point cut and 11% probability of a half-point move next week, showing slightly more conviction for a larger reduction than the day before. By year-end, markets still expect the Fed to cut rates by a total of 75 basis points.

“Today’s CPI report has been trumped by the jobless claims report,” Seema Shah, chief global strategist at Principal Asset Management, wrote in reaction to the data. “While the CPI report is a tad hotter than expected, it will not give the Fed a moment of hesitation when they announce a rate cut next week.”

Shah said the rise in jobless claims could add urgency to the Fed’s decision, with Powell likely to indicate that a series of rate cuts is coming. Still, she noted, while some at the Fed, including potential chair contenders, may float the idea of a 50 basis point cut, a move of that size isn’t necessary.

“Jobless claims have jumped but are still quite low compared to 2021 levels, while the broader economic activity data and earnings reports do not signal an economy that is approaching a recessionary tipping point,” Shah said.

Against that backdrop, the August inflation report offered a mixed picture. Sticky services inflation eased in some categories, with medical care services down 0.1% month over month after a sharp rise in July and communication services also declining. But travel costs stayed hot, with airfares climbing 5.9% in August after a 4% gain the month prior.

Capital Economics noted that while softer medical costs kept “supercore” inflation — core services excluding shelter — in check, the Fed may be more concerned about firmer gains in cyclical or tariff-exposed categories.

On a monthly basis, lodging away from home fell 1% in August after a sharper 2.9% drop in July. Used car and truck prices rose 0.5% after a 0.7% decline the prior month. New vehicle prices saw a similar reversal from earlier easing. Some economists warn that inflation remains too sticky for comfort.

“The CPI is still too firm,” Claudia Sahm, chief economist at New Century Advisors and a former Federal Reserve Board economist, told Yahoo Finance. “This is not consistent with making progress toward 2%. When they cut next week, they will not be cutting because we have good news on inflation. They’ll be cutting because we have bad news on employment.”

Separately, wholesale inflation data out on Wednesday showed producer prices fell 0.1% in August, the first decline in four months, as a drop in services prices offset modest goods inflation. The data suggests businesses are absorbing some tariff costs, while the lack of stronger price pressures, even with import duties in place, may also point to softening domestic demand amid a weakening labor market.

Read the full article HERE.

Gold edged up to fresh highs on Tuesday as investors continued to bet on a September rate cut from the Federal Reserve and the dollar stayed weak.

Gold (GC=F) futures touched an intraday high north of $3,700 per troy ounce before paring gains, while spot prices climbed above $3,650.

The moves came as revised US jobs data highlighted a labor market slowdown, with investors holding firm on a 25 basis point cut while awaiting this week’s inflation report.

“If inflation comes in ‘softer,’ the easing narrative will be reinforced,” said Linh Tran, market analyst at XS.com on Tuesday, adding that lower rates will further weaken the dollar, helping support gold prices.

The US dollar index (DX.Y.NYB) has declined more than 9% year-to-date, hovering below 98 on Tuesday.

“Conversely, ‘hot’ data could push yields and the USD higher, potentially triggering a technical correction in gold before the primary trend is reassessed,” Tran added.

Gold has been on a tear this year, up more than 40%, far outperforming the broader S&P 500 (^GSPC) index, up 10% year to date.

Over the past month, the precious metal has rallied 7%, prompting concerns that gold may be overextended in the short run.

Dilin Wu, research strategist at Pepperstone, noted gold “is in overbought territory,” with traders likely more “cautious” when adding new long positions.

“This also suggests that there may be short-term pullback or consolidation as the market gathers strength,” he added.

Central banks have been adding gold to their holdings for 14 straight quarters, dating back to 2020, with China’s latest August purchase its tenth straight monthly increase in reserves.

For the first time since 1996, foreign central bank gold reserves now exceed US Treasurys, according to Bloomberg data compiled by Crescat Capital macro strategist Tavi Costa.

Goldman Sachs analysts, meanwhile, have called gold their “highest-conviction” commodities trade, arguing a bull case in which prices could climb toward $5,000 by the end of next year.

Read the full article HERE.

Key Takeaways

Gold has surged more than a third this year to over $3,500 per troy ounce, but Goldman Sachs warns that gold’s price could increase dramatically if the Trump administration’s attack on the independence of the U.S. Federal Reserve is successful.1

TradingView. “XAUUSD.” They say that would trigger a flight from traditional safe havens—assets people run to when markets get shaky—traditionally, the U.S. dollar and government bonds.

In a major analysis released this week, the investment bank outlined scenarios where gold could reach nearly $5,000 per ounce, noting that “if 1% of the privately owned U.S. treasury market were to flow into gold, the gold price would rise to nearly $5,000 [per troy ounce].” That’s 42% above its current price.

Why the Federal Reserve’s Independence Is Under Threat

The warning comes as President Donald Trump has made significant moves to exert control over the Federal Reserve, including efforts to remove Fed Governor Lisa Cook, which is now being challenged in the courts. These moves have Wall Street bracing for what JPMorgan analysts in their own major report this week called a “Fed independence trade”—moves to prepare for a world where the dollar and U.S. Treasurys no longer feel like the safest places to park your money.

Investors fear that a politicized Fed would slash rates to juice the economy for short-term gain, stoking fears of higher inflation down the road.2 Goldman’s analysts were quite direct about the implications: “A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices, and an erosion of the dollar’s reserve currency status. In contrast, gold is a store of value that doesn’t rely on institutional trust.”

For these reasons, Goldman concluded that “gold remains our highest-conviction long recommendation“—that is, the best long-term investment right now. 

The Market Is Already Shifting

In its analysis, J.P. Morgan noted what it found as it tracked the moves of major investors since early August, when Trump’s attacks on the Fed intensified. They focused on trades in the following assets:

In short, many on Wall Street aren’t waiting for a headline crisis—they’re already getting into their defensive position.

The Mathematics Behind the $5,000 Target

Goldman broke down the math this way: Private ownership of the U.S. Treasury market—America’s IOUs—is worth about $57 trillion. If investors were to move just 1% of that money into gold, it would mean $570 billion flowing into the gold market, which is tiny by comparison. To put this in perspective, the analysts noted that the entire gold exchange-traded fund (ETF) market—what regular investors use to buy gold as they would a stock—is about the same size as what would be moving over from Treasurys.

That extra demand, they argue, would cause the price of gold to rise to the $5,000 target. In fact, Goldman’s “normal” forecast already predicts gold reaching $3,700 by the end of 2025 and $4,000 by mid-2026, the result of their expectation that central banks will continue their current gold buying spree.

JPMorgan’s analysis is a bit more conservative, arguing that an extended attack on the Fed’s independence could move the price of gold to above $4,500 in 2026.

Fast Fact

Gold has always been the classic safe haven. Unlike stocks or bonds, it doesn’t depend on a company or government keeping its promises—and it’s held its value through every financial crisis in history.

What This Means for Your Portfolio

For those concerned about these analyses, experts typically suggest that gold represent up to 5% to 10% of a diversified portfolio.3

Morningstar. “How to Use Gold in Your Portfolio.” The easiest ways to add gold to your holdings are to buy shares of gold ETFs (like GLD or IAU), which trade like stocks, or to purchase physical gold from reputable dealers—though the latter involves storage and insurance costs.

However, it’s crucial to keep in mind that gold doesn’t pay dividends or interest, and its price can swing wildly. While Goldman’s projection is possible, it’s not a sure thing, but a what-if scenario. Goldman’s baseline forecast of $3,700-$4,000 is already 6% to 15% above the current gold price, and the $5,000 forecast would require a fundamental breakdown in trust in U.S. institutions that one would hope won’t ever materialize.

The Bottom Line

Goldman Sachs analysts expect gold to climb steadily to $3,700 to $4,000 over the next couple of years, but the risk of direct administration control over the Federal Reserve could spark a much sharper rally. If investors lose faith in the dollar and U.S. bonds, gold could become the go-to safe haven, pushing prices toward $5,000.

Read the full article HERE.

Gold hit a fresh record on Monday, bolstered by an unexpectedly weak US employment report that saw wagers increase on the Federal Reserve cutting interest rates.

Bullion rose as much as 1% to more than $3,622 an ounce, eclipsing the previous record set on Friday after a pivotal US payrolls report showed a slowdown in hiring, while unemployment increased to the highest level since 2021.

That saw swaps traders boost bets on interest rate cuts, and they are now pricing almost three reductions for the rest of this year. Lower borrowing costs tend to increase the appeal of non-yielding gold, which has also seen support from strong haven demand amid concerns over the US central bank’s future.

Looking ahead, renewed rate cut hopes will face tests this week from a benchmark revisions for US jobs data on Tuesday and US producer and consumer inflation prints on Wednesday and Thursday. Traders will also watch how the market absorbs auctions of 3-, 10-, and 30-year Treasuries.

Both gold and silver have more than doubled over the past three years, with mounting risks in geopolitics, the economy and global trade driving haven demand. An escalation in President Donald Trump’s attacks against the Fed has increased worries over its independence, with gold prices rallying more than 7% over the past two weeks as demand for safe-haven assets intensifies.

Investors are waiting for a landmark ruling on whether Trump has legitimate grounds to remove Fed Governor Lisa Cook, which could allow the president to replace her with a dovish-leaning official. Goldman Sachs Group Inc. said last week that gold could rally to almost $5,000 an ounce if the Fed’s independence were damaged and investors shifted just a small portion of holdings from Treasuries into bullion.

“I wouldn’t want to stand on the short side of this trade, though I do think profit taking could emerge,” said Ahmad Assiri, an analyst at Pepperstone. “Today’s rally is being powered by multiple forces converging at once, a backdrop that keeps the medium-term story intact, even if the near term turns volatile.”

Trump’s administration also moved on Friday to exempt gold bullion, along with some metals, from his country-based tariffs. The measure formalizes a plan to exempt gold bars from tariffs, after a US Customs and Border Protection ruling weeks ago stunned traders and caused confusion by indicating bullion would be subject to import duties.

Meanwhile, data released at the weekend showed the People’s Bank of China increased its gold holdings in August for a 10th month, in a continued push to diversify its reserves away from US dollars.

Spot gold was trading  higher at $ an ounce as of 11:47 a.m. in London. The Bloomberg Dollar Spot Index edged lower. Silver, palladium and platinum all gained.

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US job growth cooled notably last month while the unemployment rate rose to the highest since 2021, fanning concerns the labor market may be on the cusp of a more significant deterioration.

Nonfarm payrolls increased 22,000 in August, according to a Bureau of Labor Statistics report out Friday. Revisions showed employment shrank in June — the first payrolls decline since 2020. The jobless rate ticked up to 4.3%.

Traders solidified bets that the Federal Reserve will cut interest rates at its Sept. 16-17 meeting, which Chair Jerome Powell signaled in a speech last month during the central bank’s annual Jackson Hole symposium. The S&P 500 opened higher and Treasuries rallied.

Here are five key takeaways from Bloomberg’s TOPLive blog

The figures will likely heighten concerns about the durability of the labor market after the prior month’s report showed a shockingly cooler hiring picture than previously thought. Job gains have moderated materially in recent months, openings have declined and wage gains have eased, all of which are weighing on broader economic activity.

Several sectors, including information, financial activities, manufacturing, federal government and business services, posted outright declines in August. Job growth was concentrated in health care and leisure and hospitality.

“The labor market is going from frozen to cracking,” Heather Long, chief economist at Navy Federal Credit Union, said in a note. “This is a white-collar and a blue-collar jobs recession.”

While July payrolls were revised slightly higher, the jobs picture looked even worse in June. The adjustments follow the sizable downward revisions seen in the last jobs report, which were the largest since 2020. Those prompted President Donald Trump to fire the BLS commissioner and accuse her, without evidence, of manipulating the numbers for political gain.

Trump has named EJ Antoni, chief economist of the conservative Heritage Foundation, to step into the role, but he must be confirmed by the Senate first.

Accounting for the revisions in this report, employment growth in the last three months has averaged just 29,000. Payrolls have come in under 100,000 for four straight months, extending the weakest stretch of job growth since the pandemic.

In addition to the routine revisions the BLS conducts every month, the agency also administers annual revisions that benchmark the data against a series that’s more expansive, albeit less timely. A preliminary estimate of that figure is due Tuesday ahead of the final number early next year.

Despite a warning earlier Friday that BLS was experiencing “technical difficulties,” the data came out as scheduled at 8:30 a.m. in Washington.

What Bloomberg Economics Says…

“August’s weak jobs report seals the deal for a rate cut at the Sept. 16-17 FOMC meeting. Though headline nonfarm payrolls may be overstating the weakness in hiring, the uptick in the unemployment rate suggests labor demand is weakening faster than supply.”

— Anna Wong, Stuart Paul and Estelle Ou. To read the full note, click here

Economists have largely characterized the labor market as a low-hiring, low-firing environment, though layoffs are picking up somewhat.

The increase in unemployment partly reflected re-entrants to the job market, but the number of people who have permanently lost their jobs rose to the highest in nearly four years. The number of people unemployed for 27 weeks or longer climbed to levels not seen since 2021, and there were also more Americans working part-time for economic reasons.

Job-cut announcements in August were the highest for that month since 2020, according to Challenger, Gray & Christmas. And September’s tally is already underway as ConocoPhillips, the largest independent US oil producer, said Wednesday it plans to cut as much as a quarter of its global workforce.

The Challenger report also showed a pullback in hiring plans in August, while separate figures from ADP Research and Revelio Labs pointed to slower job growth last month as well. Metrics from the Institute for Supply Management indicate employment in both manufacturing and services sectors has contracted in recent months.

The participation rate — the share of the population that is working or looking for work — rose to 62.3%. The rate for those between the ages of 25 and 54, known as prime-age workers, increased to the highest in nearly a year.

The unemployment rate for Black Americans continued to climb, rising to the highest in nearly four years, partly reflecting more people joining the workforce. The jobless rate for Hispanic workers and those without a high school diploma also rose.

Central bankers pay close attention to how labor supply and demand dynamics are impacting wage gains — especially with inflation risks poised to the upside. The report showed average hourly earnings rose 3.7% from a year ago.

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Wall Street veterans used to tell their underlings, and their clients as well, that the bond market is a daily referendum for the government. It is facing competition now.

Decisions on taxes, spending, and broader economic policy get baked into Treasury bond prices, and then reflected in yields, almost instantaneously. Government borrowing costs can rise and fall based on those movements, making the bond market’s daily assessment of policy impossible to ignore.

That is still largely the case. Politicians tend not to dismiss fixed-income markets when they start to signal concern, but the recent vintage of bond vigilantes wields significantly less influence.

That has left gold to act as the new canary in the financial market’s coal mine.

Bullion prices have risen nearly 38% so far this year, topping $3,500 an ounce for the first time this week. The U.S. dollar, meanwhile, suffered its worst first-half performance in five decades. It remains pinned near the lowest levels in three years relative to a basket of its global peers.

Gold was also the best-performing asset over the month of August, according to Bank of America data. It rose about 3.95% as uncertainty about tariffs, data showing inflation is worsening, and President Donald Trump’s effort to remove Federal Reserve governor Lisa Cook rattled investors.

“The latest leg higher [in gold prices] reflects a potent mix of renewed rate cut expectations, mounting concerns over Fed independence, and a fragmenting world order that is reshaping flows across safe-haven assets,” said Ole Hansen, head of commodity strategy at Saxo Bank.

As a haven asset, gold has its issues. It doesn’t pay interest, carries costs associated with storage, and can sometimes be difficult to liquidate on short notice. It has also been subject to recent confusion regarding tariffs.

But gold has been extremely useful in articulating the market’s crucial macroeconomic tension: that Trump’s tariffs will both blunt growth prospects and stoke consumer-price pressures. Meanwhile, his relentless attacks on the Fed could lead to artificially low interest rates that expose longer-dated bonds to increased inflation risks.

“For many investors, long-dated bonds no longer serve as the default defensive allocation, opening the door for gold to capture a larger share of safe-haven demand alongside other tangible assets such as silver and platinum, both supported by constrained supply outlooks,” Hansen said.

Silver prices, which rose past $4o an ounce for the first time since 2011 this week, were at $41.46 late on Wednesday. That extends the metal’s year-to-date advance to around 42%.

Gold is also getting a tailwind from buying by central banks. Those purchases have risen at a record pace over the past three years, led by China’s effort to diversify its foreign-currency holdings away from the U.S. dollar.

The People’s Bank of China has added 21 metric tons of gold to its reserves this year, based on calculations from Reuters, taking its overall total to just over 2,300 tons.

Tariffs have also slowed global trade, leaving foreign countries without the dollars they would normally earn from selling goods into the U.S. Those dollars were often recycled into U.S. Treasury bonds, but that process appears to be unraveling.

Crescat Capital’s macro strategist Otavio Costa notes that global central bank gold holdings represent 27% of their overall reserves, the highest in nearly 30 years. Foreign holdings of U.S. Treasuries, meanwhile, have fallen to around 23%, the lowest since the 2008-2009 financial crisis.

It is difficult to focus on the longer-term challenges posed by staggering levels of government debt, or a central bank at risk of coming under the sway of politics, when stocks continue to print all-time highs thanks to the artificial intelligence investment boom.

But gold’s recent rally, and the signals it echoes, shouldn’t be dismissed as merely an inflation warning. It is a signal that the U.S. is at risk of losing its role at the center of the financial system as doubts rise about the dollar’s long-term value.

Read the full article HERE.