The price of gold hit a record high of US$3,565 per ounce on Wednesday, amid a weak

United States dollar and increasing confidence that the U.S. Federal Reserve will cut interest rates later this month. The Financial Post dug into the factors behind gold’s blockbuster year and what analysts think lies ahead for the precious metal.

What’s behind the surge?

The price of gold has risen roughly 20 per cent over the last six months and 40 per cent since September 2024. It reached its previous all-time high of US$3,500 per ounce on April 22, following a stock market slump after U.S. President Donald Trump criticized Federal Reserve chair

Jerome Powell for not moving to cut interest rates. Since then, concerns over the Fed’s independence have continued to grow, as Trump is embroiled in an attempt to fire governor Lisa Cook from her role. Spooked investors are now pushing gold’s spot price to new levels on expectations of a 25-basis-point rate cut at the central bank’s next meeting on Sept. 17 — the likelihood of which the market puts at 91 per cent, according to the CME FedWatch tool.

The next U.S. jobs report, due Friday, will provide yet more insight into the country’s economic wellbeing and inform the Fed’s decision, spurring more conjecture about its next move.

Rosenberg Research & Associates Inc. said in an Aug. 27 report that the “most bullish development” from gold’s prior run-up in April was that prices surged “despite headwinds from traditional valuation drivers such as elevated real interest rates and a surging U.S. dollar.”

Who is buying gold?

Investors traditionally gravitate toward gold as a safe store during tumultuous times and there has been no shortage of tumult in 2025, thanks to U.S. tariffs, global geopolitical risks and inflationary pressures.

The tariff- and Fed-related uncertainty has also weighed on the U.S. dollar, making it less expensive for global buyers to scoop up bullion. The U.S. dollar index is down around nine per cent this year against a basket of six other currencies.

As they seek to diversify their reserve assets, central banks have been a “key pillar of global demand,” purchasing gold at an “eye-watering pace” in 2024, exceeding 1,000 tonnes for the third year in a row, according to the World Gold Council.

“A more splintered world marked by more frequent conflict, combined with growing concerns over elevated government debt levels and questions about the long-term role of the U.S. dollar in the international system, could strengthen the case for gold as a diversifier against persistently elevated levels of uncertainty,” according to a June report from RBC Wealth Management.

How high could gold go?

J.P. Morgan Research said in a June note that due to “recession probabilities and ongoing trade and tariff risks,” it expects gold prices to average US$3,675 per ounce by the last quarter of 2025 and rise toward US$4,000 per ounce by the second quarter of next year.

“We remain deeply convinced of a continued structural bull case for gold and raise our price targets accordingly,” Natasha Kaneva, head of global commodities strategy at J.P. Morgan, said in a report.

Desjardins said on Aug. 28 that the global shift by central banks from the dollar to gold shows “no signs of letting up,” and that “ongoing economic and geopolitical uncertainty” should help gold end the year around US$3,400 per ounce.

  • The gold market is too important to be left to private clubs
  • Gold drives Ontario Teachers’ to 2.1% gain in tough climate

“With interest rate cuts set to resume this fall and inflation expected to remain above the two per cent target in the U.S., gold should hover near the US$3,500 mark in 2026,” Desjardins economists said in a note.

Looking forward, Rosenberg Research said there’s an “intriguing” bull case for gold. “With a Fed now signalling that rate cuts are on their way, weighing on the greenback in the process, we believe a return of basic fundamentals will fuel the next gold leg higher,” their report said.

“Layer on extended uncertainty and further central bank purchases (thanks to ‘de-dollarization’ efforts), we see a path emerging to $4,000 per ounce.”