The gold price hit a new all-time high on Friday, September 6, after topping $3,600 per troy ounce for the first time. It marks the continuation of an extended rally which has seen the gold price gain 36 per cent year-to-date, and 111 per cent over the past three years.
This year, gold has been a standout performer, handily beating the S&P 500, Bitcoin and international markets. Analysts expect gold to extend its run and break through the $4,000 barrier in 2026. In a bull-case scenario, analysts at Goldman Sachs suggest gold may trend toward $5,000.
The gold price surged on Friday to extend its record-setting run and breach the $3,600 mark for the first time. Investors piled into gold after US jobs data revealed the economy had only added 22,000 jobs, well below analyst expectations.
While rate cuts were already priced in for September, weak job market data piles pressure on the Fed to go further. Bank of America now expects two 25bps cuts in Q4, and some traders are betting the Fed could make a dramatic 50bps cut this month.
Investors expect the value of the US dollar to fall, and that depreciation will prompt flight from the greenback and a move toward gold. It’s a dynamic that would align with historical trends, which show that over time, the gold price has an inverse relationship with the value of the dollar.
Central banks around the world are on an extended gold-buying spree. Central bank purchases have exceeded 1,000 metric tons every year since 2022, and are expected to amount to at least 900t in 2025, Reuters reports.
While the US dollar remains the world’s reserve currency and still accounts for the majority of central banks’ foreign reserve currency, its position has been significantly degraded since the turn of the millennium. In the year 2000, the US dollar accounted for more than 71 per cent of all foreign exchange reserves – by 2024, that number had fallen to 57.8 per cent.
That’s the view of investors and reserve managers polled by the World Gold Council this summer, 95 per cent of whom said they believed global central bank reserves would increase over the next 12 months. None of the respondents anticipated a decline in central bank gold reserves, while 73 per cent anticipated “significantly” lower US dollar holdings in the next five years.
This year, gold net ETF inflows notched a new record of $47 billion, as investors seek a safe-haven amid uncertainty around trade and geopolitics more broadly. That inflow has been a catalyst for the gold price, sending prices higher and in turn driving demand further.
The latest data from the World Gold Council showed that August marked the third consecutive month of net ETF inflows, following a dip in May. Last month’s net inflow of $5.5 billion brings gold ETFs’ total AUM to $407 billion, with Western funds leading the rally.
Analysts expect gold ETF inflows to continue for the remainder of the year and continue into 2026, potentially taking the price of gold through the $4,000 barrier for the first time next year.
Historically, the US dollar has been considered amongst the preeminent stores of value. It continues to comprise the majority of central bank reserve currency and remains the most popular currency for international payments and loans. This status has been said to grant the US an “exorbitant privilege”, allowing the US government to borrow cheaply and gain access to cheap imports.
But under the Trump administration, long-standing US monetary policy has gone into reverse. While the Federal Reserve remains independent from the White House, the President is able to exert power over the US dollar through tax and trade policies.
This year, the gold price has surged over 30 per cent, and major investment banks see further gains ahead. JP Morgan projects gold averaging about $3,675 by late 2025 and rising toward $4,000 by mid-2026. Goldman Sachs has lifted its year-end 2025 target to roughly $3,700 (up from $3,300) and notes that, in extreme scenarios, gold could even approach $4,500.
This article is provided for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any financial instrument. Past performance is not indicative of future results.
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