Gold nears $4,000 as it heads for 16-year high
3 Min Read
The Federal Reserve's dovish stance has been a central catalyst in the rise in price.
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Newly refined gold granules before they are processed into gold bars at the ABC Refinery smelter in Sydney, Australia, Wednesday, April 30, 2025. (AP Photo/Mark Baker)
Gold surged to a new record high on Tuesday, setting the stage for its strongest monthly performance in almost 16 years. A confluence of factors, ranging from fears of a potential US government shutdown to growing expectations of further Federal Reserve rate cuts, has fueled demand for the precious metal as a safe-haven asset.
As of 06:34 GMT, spot gold rose 1% to $3,870.14 per ounce. Futures contracts for December delivery climbed 1.1% to $3,897.80. With a 12.3% gain so far in September, gold is heading toward its best monthly rise since November 2009.
BREAKING:
— GoldSilver HQ (@GoldSilverHQ) September 29, 2025
Gold price now only 3.2x away from real inflation adjusted all-time high. pic.twitter.com/klGHUdzc5N
The Federal Reserve's dovish stance has been a central catalyst. Traders are pricing in an 89% chance of a 25-basis-point cut at the Fed's October meeting, with speculation of further reductions before year-end. Rate cuts lower the opportunity cost of holding non-yielding assets like gold, making it more attractive compared to bonds and savings.
Alberto Musalem, President of the Federal Reserve Bank of St Louis, said he remains open to additional cuts but cautioned that interest rates must remain high enough to contain inflation.
Shutdown fears amplify safe-haven demand
Talks between US President Donald Trump and congressional leaders have failed to yield a funding deal, raising the prospect of a shutdown that could disrupt government services and delay key economic data, including the September jobs report. The threat of data gaps compounds uncertainty for investors and adds momentum to gold’s rally.
The US Department of Labor confirmed that it would suspend publication of official labor statistics, including the monthly employment report, in the event of a partial shutdown.
The sharp decline of the US dollar has provided additional support. The dollar index has tumbled nearly 10% this year, its steepest drop since 2017. A weaker dollar makes gold cheaper for international buyers, reinforcing demand.
Central bank demand creates structural support
Institutional demand has been another key driver. Central banks have purchased close to 1,000 metric tons of gold annually for four consecutive years, accounting for nearly a quarter of global demand. China's central bank has led the push, steadily adding to its reserves as part of its de-dollarization strategy.
The World Gold Council recently reported that 95% of central banks expect global gold reserves to increase over the next year, with nearly half planning to expand their own holdings. This persistent buying has provided a structural floor for prices.
Market outlook: $4,000 in sight?
Investment banks are increasingly bullish. Citi has lifted its gold price target to $4,000 in the next quarter, while JPMorgan Research expects prices to average $3,675 in the final quarter of 2025, rising further in 2026.
Analysts describe the rally as a "perfect storm" supported by Fed policy, dollar weakness, geopolitical uncertainty, and central bank accumulation.
The rally has extended to other precious metals. Silver rose 0.3% to $47.08 per ounce, gaining 18.6% so far this month. Platinum advanced 0.5% to $1,609.40, while palladium climbed 0.9% to $1,278.62.
