Gold has shattered previous price records in a dazzling rally, propelled by a mix of economic and political anxieties that have convinced a growing number of investors and governments to place faith in its time-tested “safe haven” status.
The price of gold topped $3,500 per troy ounce for the first time in history on Tuesday, the latest milestone in an especially strong 2025 that has seen the metal gain some 35 percent while outpacing both stock indexes and major cryptocurrencies.
What Does the Price of Gold Say About the U.S. Economy?
Gold has historically been considered a refuge during times of economic volatility, with investors flocking to the metal during stretches of inflation, fiat currency risks and political crises.
Speaking to Newsweek, experts cited several reasons behind gold’s recent rise, but “uncertainty” and “caution” were the prevailing themes when it came to the U.S. economy.
“A cocktail of factors has fueled gold’s rally, particularly as the price drivers have shifted, heightened geopolitical, economic and trade uncertainty,” said Suki Cooper, precious metals analyst at Standard Chartered. “Investor appetite has grown both in the U.S. and on a global basis.”
Adrian Ash, director of research at gold-trading platform BullionVault, attributed this to both long-term corrosives on the economy, as well as the “immediate headlines.”
“It’s not like April, where the stock market was plunging after Liberation Day—the tariff turmoil, what that was going to mean for global trade and so on,” he told Newsweek. “There’s nothing really specific you can hang it on here.”
Ash said the manner in which [President Donald] Trump’s trade and foreign policy is “upending so much of the past three, four decades of world order” were a significant tailwind and motivating factor for crises-conscious buyers. However, he added that gold’s surging price could also be tied to growing questions about the sustainability of U.S. government debt—now over $37 trillion according to Treasury calculations.
Fed Between ‘Rock and a Hard Place’
“Uncertainty, uncertainty, uncertainty,” said Rhona O’Connell, head of market analysis at StoneX, when asked what has driven gold prices higher this year.
“The U.S. economy has been surprisingly robust, but the federal debt is now at 126 percent of GDP,” she told Newsweek, adding that these fiscal pressures and the approaching debt ceiling leave the Federal Reserve “between a rock and a hard place when it comes to balancing inflationary forces against the cost of debt servicing.”
As well as the Fed’s longer-term fiscal burdens, gold’s appeal as a risk hedge has been bolstered by Trump‘s recent attacks on the central bank’s independence, raising fears of politicized monetary policy and further eroding trust in the dollar.
In addition to months of pressure on Jerome Powell to slash interest rates and a series of verbal and legal attacks on the fed chair, Trump’s recent firing of Governor Lisa Cook over alleged mortgage fraud has been viewed as a further encroachment on the central bank’s political autonomy.
“You’ve got a very clear attack on Fed Independence,” said Ash of BullionVault, “which I think long-term is what’s really lit a fire under gold right now.”
Investors are also pinning their hopes on an all-but-certain rate cut at the Fed’s mid-September meeting, as lower rates typically reduce the appeal of yield-bearing assets like Treasuries, while boosting the allure of alternatives such as gold. Traders currently place the odds of a 25 basis-point cut at 98 percent, according to the CME FedWatch tool.
“Gold’s strength shows that investors are preparing for the Fed’s next steps and managing risk in an uncertain environment,” said Joseph Cavatoni, senior market strategist for North America at the World Gold Council. “Diversification is the focus. Tariffs and dollar weakness are part of the picture, but the bigger takeaway is that investors are turning to safe-haven assets.”
As experts noted, gold’s recent run has been driven largely by buying from other central banks—in East Asia, Europe and the Middle East—who are also trimming their holdings of U.S. Treasuries.
According to Michael Klein, professor of International Economic Affairs at Tufts University, central banks across the globe are increasingly wary of holding large amounts of dollar-denominated assets due to the contemporary political situation, and are swapping many of these holdings for the more reliable metal.
Trump’s domestic and trade policies are channeling more foreign funds into gold, amid growing concerns over the stability and oversight of the U.S. economy. Experts see little on the horizon that could take the wind out of gold’s sails right now, with price forecasts holding firmly above $3,500 for the remainder of the year.
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