Introduction to Gold’s Performance and Market Expectations
Gold has surged 50.89% in 2025, nearing the $4,000 mark, driven by strong safe-haven demand and expectations of interest rate cuts from the Federal Reserve (Fed). This surge is also fueled by economic and political uncertainties in the United States, France, and Japan.
Recent Gold Price Movements
- On Monday, gold reached a new peak, climbing to $3,963.96 per ounce.
- Spot gold prices increased by 1.27% to $3,959.08 per ounce.
- Gold futures for December delivery rose by 1.8% to $3,979.80 per ounce.
Factors Driving Gold’s Surge
Several factors have contributed to gold’s impressive performance in 2025:
- Fed Rate Cut Expectations: Market participants expect the Fed to cut interest rates by 25 basis points at its upcoming October meeting, followed by another 25 basis point reduction in December.
- Central Bank Purchases: Continued buying by central banks supports gold demand.
- Safe-Haven Demand: Economic and political uncertainties in the US, France, and Japan have increased investor appetite for gold as a safe-haven asset.
- Dollar Weakness: The general weakness of the US dollar against other currencies further bolsters gold’s appeal.
Historical Context and Expert Opinions
Gabriela Siller, Director of Analysis at Banco Base, noted that this is the largest gain for an equivalent period since 1979, when gold appreciated by 70.35%.
“The macroeconomic scenario shows a slowdown in US economic indicators, increasing expectations for future monetary easing. Additionally, the weakness of the dollar against other currencies and strong inflows into gold-backed ETFs reinforce the bullish trend,” said Antonio Montiel, Director of Analysis at ATFX Education.
Political Uncertainty Boosts Gold Demand
Recent political events have further bolstered gold’s demand:
- France’s new Prime Minister, Sebastien Lecornu, and his government resigned hours after taking office, exacerbating the country’s political crisis.
- Japan’s ruling party chose Sanae Takaichi as its new leader on Saturday, potentially making her the country’s first female prime minister.
- The sixth day of the US government shutdown has begun, with the White House threatening massive federal worker dismissals.
According to Edward Meir, an analyst at Marex, political developments in France, rising yields in Japan due to inflation concerns, and the ongoing US government shutdown have all contributed to gold’s advance.
“There are fundamental and momentum-driven reasons for gold prices to continue rising and surpass $4,000 per ounce by year-end,” analysts at UBS wrote in a note.
Key Questions and Answers
- Q: Why is gold surging in 2025? A: Gold’s performance is driven by strong safe-haven demand, expectations of Fed rate cuts, central bank purchases, and dollar weakness.
- Q: What political events are contributing to gold’s rise? A: Political uncertainties in France, Japan, and the ongoing US government shutdown have increased investor demand for gold.
- Q: How significant is this year’s gold price surge? A: This year’s gain of 50.89% is the largest for an equivalent period since 1979.
