Key highlights:
- Gold prices reached an all-time high of $3,831 per ounce on Monday, marking a 45% year-to-date increase.
- Investor demand surged amid U.S. government shutdown concerns, interest rate cut expectations, and geopolitical instability.
- Inflows into gold ETFs and central bank purchases have driven the rally, making 2025 gold’s best year since 1979.
Gold prices broke past $3,800 per ounce for the first time ever on Monday, setting a new record amid growing investor unease over a potential U.S. government shutdown, rising geopolitical tensions, and expectations of interest rate cuts by the Federal Reserve.
Spot gold surged 1.6% to $3,820.96 per ounce in morning trading, briefly touching a record high of $3,831.19. U.S. gold futures for December delivery climbed 1.1% to $3,850.80. The rally extends gold’s blistering performance in 2025, with prices now up 45% since the beginning of the year.
Investors seek safety as uncertainty looms
The gold surge comes as markets brace for the possible expiration of federal funding on Tuesday. President Donald Trump is meeting with congressional leaders in a last-ditch effort to avert a shutdown, but political gridlock has rattled investors. Meanwhile, the U.S. dollar index (DXY) slipped 0.3%, making gold cheaper for foreign buyers and adding upward pressure on prices.
The DXY index has been in a persistent downtrend in 2025.
Gold typically benefits in times of economic uncertainty and low interest rates. The recent U.S. Personal Consumption Expenditures (PCE) Price Index report aligned with market forecasts, reinforcing expectations that the Federal Reserve may initiate rate cuts as soon as October. Lower rates reduce the opportunity cost of holding non-yielding assets like gold, boosting its appeal.
Central banks and ETFs fuel demand
Analysts attribute the latest leg of the gold rally to renewed demand from both institutional and retail investors. Deutsche Bank noted that exchange-traded funds (ETFs) have seen strong inflows for four consecutive weeks, nearing pandemic-era highs in holdings. The World Gold Council reported that ETF inflows are approaching 100 tonnes for September alone, the fastest pace since April.
Simultaneously, central banks have continued increasing their gold reserves, viewing the metal as a hedge against the weakening U.S. dollar and broader market instability. Speculative investors such as hedge funds also hold a record $73 billion in long gold positions, according to data from the Commodity Futures Trading Commission.
Bank of America reported $5.6 billion in inflows into gold last week, with a staggering $17.6 billion over the past month. While the bank warned that gold may be “tactically overbought,” it maintains a bullish long-term outlook, pointing out that gold still comprises just 0.4% of private client assets under management.
Gold hit a new record. What Deutsche Bank says is driving the price of the metal:
Hartnett explains the rise in precious metals as driven by inflationary policies, a return of a “bull market in war.” He justified staying long gold even though its “tactically overbought” because… pic.twitter.com/BWXcKG8s0Y
— Peter Spina ⚒ GoldSeek | SilverSeek (@goldseek) September 29, 2025
A historic year for bullion
2025 is shaping up to be gold’s strongest year since 1979, when the Iranian revolution drove prices up 126%. Today, a combination of macroeconomic, political, and structural factors is pushing gold higher. These include not only traditional catalysts like inflation and interest rates, but also mounting skepticism about the U.S. dollar’s status as the world’s reserve currency.
Bloomberg recently reported that China is seeking to become a global custodian of sovereign gold reserves, a move interpreted as part of a broader strategy to reduce dependence on the dollar and shift away from Western financial systems.
With investor anxiety showing little sign of abating and central bank policies continuing to evolve, gold’s historic rally may have further room to run in the months ahead.