Gold Rally Extends to New Record Highs

Global gold prices broke $3,600 per troy ounce on Monday, extending an explosive rally that has seen bullion gain 9% in just three weeks and 37% since January 2025. The surge reflects growing concerns about US inflation, fiscal stability, and political interference at the Federal Reserve, which have eroded investor confidence in dollar-denominated assets.

The milestone comes days after gold breached the $3,500 mark for the first time, underscoring a rapid flight to safe-haven investments amid heightened market volatility.

Fed Rate Cut Speculation Fuels Demand

Weaker-than-expected US jobs data released Friday intensified speculation that the Federal Reserve could cut interest rates by at least 25 basis points next week, with some analysts even pricing in a 50-basis-point cut.

Lower interest rates traditionally boost gold prices, as returns on government bonds fall, making the yellow metal more attractive. Analysts warn that real interest rates—adjusted for inflation—could slip back into negative territory, further strengthening gold’s status as an inflation hedge.

Stagflation and Political Pressure Weigh on the Dollar

Investor anxiety is mounting over the economic fallout from recent tariff policies and political moves targeting the Fed. Reports of attempts to remove Federal Reserve Governor Lisa Cook have raised fears about central bank independence, driving further demand for safe-haven assets.

The US dollar has already fallen over 10% against a basket of major currencies in 2025, amplifying the appeal of gold for global investors.

Central Banks and Policy Moves Add Momentum

Years of record central bank gold buying have helped bullion surpass the euro as a preferred reserve asset. Analysts, including those at Berenberg Bank, expect continued foreign demand for gold as confidence in US Treasuries wanes.

Adding to bullish sentiment, Washington recently exempted gold bars from import tariffs, ending weeks of confusion that had disrupted bullion shipments to the US market.

Outlook: Could Gold Hit $5,000?

With stagflation concerns deepening, geopolitical risks rising, and expectations of a dovish Fed, some investment banks, including Goldman Sachs, project gold could approach $5,000 per ounce if current dynamics persist.

For investors, gold remains a critical portfolio hedge against inflation, currency risk, and policy uncertainty, as markets navigate one of the most turbulent macroeconomic backdrops in recent history.