Gold Extends Rally: What’s Powering the Surge Past $3,500?

Gold prices have recently recorded a remarkable streak, climbing for seven consecutive trading days and vaulting past the historic $3,500 mark per ounce. This sustained momentum marks one of the strongest runs in recent years and underscores the powerful mix of economic, geopolitical, and institutional forces reshaping the gold market in 2025.

Why Gold Is Rallying: Key Drivers

Several intertwined factors have contributed to this record-breaking rally:

1. Federal Reserve Rate Cut Expectations
   Market sentiment has shifted sharply in favor of imminent monetary easing by the Federal Reserve. With inflationary pressures lingering and signs of softening in the US labor market, traders are pricing in a high probability—up to 90%—of a 25 basis point rate cut at the upcoming Fed meeting. There is even speculation about a larger 50 basis point move if key employment data disappoints. Historically, a lower interest rate backdrop reduces the opportunity cost of holding non-yielding assets like gold, pulling new investment into the precious metal.

2. Political Pressure and Central Bank Independence
   The US central bank’s independence is facing unprecedented scrutiny, with the Trump administration mounting public pressure and even attempts to replace Federal Reserve officials. These interventions have unsettled market participants, raising concerns about the stability and predictability of US monetary policy. The potential for politically driven policy decisions adds risk to the US dollar outlook, strengthening gold’s appeal as a safe haven.

3. Weakening US Dollar
   The dollar has softened in anticipation of rate cuts and on doubts regarding future US policy stability. As gold is globally priced in dollars, a weaker greenback typically results in higher gold prices, making it more attractive for non-US investors.

4. Central Bank and Institutional Demand
   Sovereign and institutional buying is at its strongest pace in years. Central banks from China, India, Turkey, and Poland have been aggressively adding to their gold holdings, a trend that accelerated in 2024 and continues in 2025. Notably, gold has now surpassed the euro as the second-largest global reserve asset after the US dollar, reflecting a broader trend of “de-dollarization.” Simultaneously, exchange-traded funds (ETFs) like the SPDR Gold Trust have seen meaningful inflows, signaling that large investors continue to add gold despite the higher price.

5. Geopolitical Uncertainty
   Geopolitical tensions remain elevated, from ongoing trade disputes to new legal challenges regarding past tariff policies. Such uncertainty routinely drives investors toward assets perceived as more stable, such as gold.

What To Watch: Upcoming Economic Events

While gold prices have soared, all eyes remain on critical US economic data releases set for this week, including manufacturing indices, job openings, and especially the highly anticipated nonfarm payroll report. Should the labor market data signal economic weakness, the case for a decisive rate cut strengthens, which would likely drive another leg higher for gold. Conversely, stronger-than-expected numbers could temporarily halt the rally or trigger a modest correction.

Strategic Perspectives: Is There Room to Run?

Analysts remain bullish on gold for the remainder of the year, with forecasts suggesting prices could approach $3,700 before year-end and potentially test the $4,000 level in 2026 if current trends persist. The fundamental backdrop—persistent inflation risk, fragile central bank credibility, robust sovereign buying, and continued political headwinds—appears to provide firm support. Notably, even at these record levels, institutional appetite is undiminished, reflecting consensus that gold’s value as a portfolio hedge is as relevant as ever.

For traders and long-term investors, buying the dips remains the preferred strategy. Price corrections could be triggered by stronger economic data or a temporary boost to the US dollar, but these are widely seen as opportunities amid an otherwise bullish structural environment.

In Summary

Gold’s remarkable surge to new all-time highs is propelled by a convergence of softer US monetary policy expectations, eroding faith in the dollar’s supremacy, surging demand from central banks and institutions, and persistent geopolitical risks. As economic and political uncertainties continue to swirl, gold’s role as a store of value and global reserve asset is capturing renewed attention from investors of all sizes.