Gold Is Pricier Than Ever. Here’s Why Experts See It Rising Even Higher

Introduction to Gold Prices

Gold prices have surged to a fresh record high, extending a blistering rally that experts don’t expect to end anytime soon. The reasons behind gold’s stellar year are plentiful and interrelated, including geopolitical tensions, economic uncertainty, a weaker U.S. dollar, and the interest rate outlook. Veteran bond trader Jeffrey Gundlach has forecast that gold will reach $4,000 an ounce before the end of the year, and believes a 25% allocation to the precious metal is "not excessive" given underlying trends.

Key Takeaways

• Gold surged to a fresh record high, with gold futures rising 2% to trade at an all-time high of about $3,780 an ounce.
• The real gold price, which adjusts for inflation, hit a record high earlier this month for the first time since 1980.
• Deutsche Bank analysts forecast that gold prices could rise above $4,000 by the end of 2025, implying a full-year return of more than 50%.
• Investors often acquire gold as a hedge against inflation, political turmoil, and economic uncertainty.

What This Means for Investors

Investors are increasingly turning to gold as a safe-haven asset, driven by central bank demand, a weaker dollar, and interest rates. Bullion, as well as exchange-traded funds tied to gold or to shares of miners, could provide entry points for investors looking to diversify their portfolios. The decline of the U.S. dollar, concerns over geopolitical tensions, and the potential for further interest rate cuts are all expected to support gold prices in the coming months.

Central Banks Are Buying Gold Despite Record Prices

Central banks around the world are buying gold at a record pace, driven by conflict in Europe and the Middle East, as well as simmering tensions between the U.S. and China. According to the World Gold Council’s 2025 Central Bank Gold Reserves Survey, 95% of central bankers expect global gold reserves to increase this year, and a record 43% forecast their own bank’s reserves would increase over the same period. Geopolitical crises are a major reason central banks add to their gold reserves, with 85% of respondents citing gold’s performance during times of crisis as highly or somewhat relevant to their gold portfolio.

A Weaker Dollar Could Be Another Tailwind

The value of the U.S. dollar has declined precipitously this year, with the U.S. dollar index tracking the value of the greenback against a basket of foreign currencies declining more than 10%. Concerns that tariffs and President Trump’s immigration crackdown would slow U.S. growth, and potentially push the economy into a recession, weighed on the dollar. A weaker greenback is expected to continue to be a tailwind for gold, which is priced in dollars, through the rest of the year.

Fed Rate Cuts Could Further Boost Demand

The Federal Reserve is also aiding gold, with the central bank cutting interest rates for the first time this year and tentatively forecasting two more cuts before the end of 2025. A lower federal funds rate should translate into lower Treasury yields, making gold relatively more attractive to investors. President Trump’s attacks on the Federal Reserve have also raised questions about the central bank’s independence, which could erode faith in U.S. monetary policy and further bolster gold.

Conclusion

In conclusion, gold prices are expected to continue their upward trend, driven by a combination of geopolitical tensions, economic uncertainty, a weaker U.S. dollar, and the interest rate outlook. Investors are increasingly turning to gold as a safe-haven asset, and central banks are buying gold at a record pace. With the potential for further interest rate cuts and a weaker dollar, gold is likely to remain a top-performing asset in the coming months. As Jeffrey Gundlach noted, a 25% allocation to gold is "not excessive" given the current market conditions, and investors would be wise to consider adding gold to their portfolios.