• Gold surges to an all-time high of $3,660 per ounce, driven by expectations of Federal Reserve rate cuts and a weakening US dollar.
  • Heavy central bank buying, with foreign institutions now holding more gold than US Treasuries for the first time since 1996, provides a structural bid.
  • Geopolitical tensions and concerns over US fiscal policy under the Trump administration are fueling a flight to safety, with analysts eyeing $4,000.

Spot gold breached a historic milestone in early trading, touching $3,660 per ounce and setting a new nominal record. The rally, which has seen the precious metal climb over 39% year-to-date, accelerated following a surprisingly weak US jobs report that solidified market expectations for as many as three Federal Reserve rate cuts before the end of the year.

The move is multifaceted, driven by a potent mix of monetary and geopolitical factors. The US dollar, down more than 10% since January, has continued to weaken, making dollar-denominated gold cheaper for foreign buyers. This dynamic has been exacerbated by growing concerns over the independence of the Federal Reserve and the trajectory of US fiscal policy, according to analysts and people familiar with large institutional flows.

A significant and perhaps more durable driver is the voracious appetite of central banks. Foreign institutions have been heavy net buyers, with data suggesting they now hold more gold than US Treasuries for the first time in nearly three decades. This pivot away from traditional dollar reserves underscores a broader reevaluation of asset safety amid mounting US debt and political uncertainty.

“What we’re witnessing is a fundamental shift in reserve management,” said one source at a major European bank, who asked not to be identified discussing client activity. “The bid from official institutions is not speculative; it’s structural and provides a very solid floor for prices.”

The break above the previous nominal high, and more significantly the inflation-adjusted peak from 1980, has technical analysts and fund managers forecasting further gains. Short-term price targets are clustered around $3,700, with some strategists sketching out a path toward $4,000 per ounce in 2025 if the Fed’s easing cycle is more aggressive than currently priced in.

Traders are now closely watching upcoming US inflation data for confirmation of the disinflationary trend. A weaker-than-expected print could be the catalyst for the next leg up, potentially pushing gold toward those near-term targets before the week is out.

This article was updated to reflect the intraday high of $3,660.