Record-breaking gold prices surpass $3,650, as markets fully account for a September Federal Reserve interest rate reduction

Gold Prices Soar to New Heights in 2025

Gold prices have been on a remarkable upward trajectory this year, with the precious metal gaining an impressive 38% so far in 2025. This surge extends the 27% increase recorded in 2024. In March, gold crossed the significant $3,000 mark, a milestone not seen before.

The rise in gold prices can be attributed to a combination of factors. A weaker dollar, strong central bank purchases, looser monetary policy, and persistent global uncertainties have all played a role in driving up gold prices.

The Federal Reserve (Fed) is expected to have a 100% probability of a rate cut at its FOMC meeting on Sept. 17. This expectation, along with the Fed's citation of inflationary pressures as a reason for not lowering interest rates, has fueled investor confidence in gold.

December U.S. gold futures gained 0.4% to $3,690, and after surpassing $3,500 earlier this month, gold has now moved past $3,600 in just over a week. This rapid increase has been accompanied by net inflows into gold ETFs, with $4.2 billion flowing into these funds during the week ending Sept. 5, the largest weekly inflow since March.

The largest weekly inflow into gold ETFs occurred in March when prices first surpassed $3,500 amid heightened U.S.-China trade tensions. JPMorgan Chase was the bank that achieved the highest net increase in gold ETFs last week, with rising inflation concerns and geopolitical uncertainties driving investors towards safe-haven assets.

Gold's long-term trajectory shows how quickly investor sentiment has shifted. International gold prices first broke through the $2,000 per ounce mark in August 2020, during the peak of the COVID-19 pandemic. Since then, gold has gained 63% in total, reaching its current price of $3,600.

Markets are currently focusing on upcoming U.S. producer and consumer price data. In July, headline inflation held steady at 2.7%. The European Central Bank is expected to keep its key rates unchanged at its meeting on Thursday.

Gold prices surged to $3,657 in Asian trading, topping $3,600 for the first time due to Fed cut bets. The U.S. Dollar Index fell to 97.35, reflecting the diminishing appeal of the greenback in comparison to gold. Despite the Fed's reluctance to lower interest rates, the strong demand for gold suggests that investors remain cautious about the global economic outlook.

Record-breaking gold prices surpass $3,650, as markets fully account for a September Federal Reserve interest rate reduction