Gold Prices Soar: Will They Break Records?

Gold Price Surge: Above $3,330, More Records Ahead?

Gold has once again captured the attention of investors after its price surpassed the $3,330 per ounce level. The rise is primarily driven by global economic and geopolitical uncertainties, including new U.S. tariff measures, persistently high inflation expectations, and speculation regarding the Federal Reserve's policy direction.

Why is Gold Price Climbing?

Traditionally, gold serves as a safe haven for investors during crises, and this time is no different. Global markets have been shaken by the new U.S. tariff package, which acts as an indirect tax by raising production costs and contributing to strengthening inflation. This pressure encourages economic players to invest in less risky, non-interest-bearing assets, such as gold.

Tariff revenues exceeded $27 billion in July, marking a historic record and indicating that global trade is bearing more burdens, potentially leading to slower growth. The dollar's stability is not guaranteed either, especially if fiscal deficits and U.S. national debt continue to grow.

The Fed's Room to Maneuver and Interest Rate Expectations

The market is now focusing its attention on an upcoming speech by Jerome Powell, the Fed Chairman, at the Jackson Hole symposium. Investors estimate an 84% probability of a 25-basis-point rate cut in September, with further easing possible before the year's end. Lower interest rates reduce the opportunity cost of gold, making the non-interest-bearing precious metal more competitive against government bonds and the dollar.

Short-Term Fluctuations, Long-Term Optimism

According to analysts, the market is currently moving within a narrow trading range between $3,330 and $3,360, often seen as a sign of an impending breakout. A sustained rise above $3,450 could give new momentum, making the $4,000 level attainable by the end of 2025, especially if the Fed indeed adopts a looser monetary policy. Conversely, a tougher message from Powell could pull prices back down to $3,300.

Experts suggest that gold's future currently oscillates within a triangle of U.S. real yields, the strength of the dollar, and monetary policy expectations. While the medium-term trend remains positive, investors should pay close attention to economic data developments.

Geopolitical Factors and Peace Efforts

Global tensions, particularly related to the eastern European conflict, continue to have a strong impact on gold prices. Although a potential trilateral summit has been suggested, many remain skeptical about a diplomatic breakthrough. Until clear signs emerge towards lasting peace, gold will continue its role as a geopolitical safe haven.

Structural Concerns Around U.S. Debt

The long-term stability of the U.S. economy could be questioned, especially due to the rising ratio of national debt to GDP. Although credit rating agencies currently maintain stable outlooks for the country, a lack of fiscal discipline could undermine investor confidence in the dollar. In such situations, gold's appeal could grow further.

UBS Forecast: Gold Price Peak by 2026

International investment bank UBS forecasts gold prices to rise further, reaching $3,600 by March 2026, $3,700 by the end of June, and remaining at this level through September. The bank has also revised upward its demand forecast for gold: they project 600 tons of ETF purchase volume for 2025, compared to the previous estimate of 450 tons.

Central bank purchases may remain strong: although they may slightly decline from last year's record, they will continue to be a significant market factor. According to UBS, global gold demand could reach 4,760 tons in 2025, reflecting a 3% increase, marking the highest level since 2011.

What Does This Mean for Investors?

Gold's role as a "strategic hedge asset" has regained strength. For investors seeking long-term stability in their portfolios, the precious metal is an increasingly attractive choice. The current environment—high inflation, geopolitical risks, structural imbalances—continues to favor gold.

As analysts emphasize: gold now balances between the Fed's strict policy and geopolitical optimism. While the upward factors already exist, they are not strong enough for a breakthrough, and the downward pressure cannot cause sustained weakening either. This balance can sustain demand for gold, especially if new negative news emerges on the economic front.

Summary

Gold has once again come to the forefront of investors' attention and could continue to play an important role in global portfolios in the coming months. Current prices are moving at historic highs, and the fundamental factors—whether it's geopolitics, inflation, or fiscal discipline—continue to support the trend. For those seeking security and opportunity simultaneously, gold remains one of the best choices in the second half of 2025 and into 2026.

(Source: Based on the communication of the chief analyst at XS.com.)