Gold at Historic Peak: Surpassed $3,800 per Ounce

The price of gold has, for the first time in history, surpassed 3,800 dollars per ounce and is currently around 3,814.08 USD/oz. This is very likely just the beginning of an intense upward trend, given that two more interest rate cuts are expected this year, which could push gold to new heights.

The price of gold has been driven by the possibility of a U.S. government shutdown, which has unsettled markets and weakened the dollar. Gold has risen by 45 percent since the beginning of the year, fueled by concerns over the level of national debt, inflation, and questions regarding the status of the U.S. dollar as the world’s primary reserve currency, reports the Financial Times.

A significant boost to the rise has come from Western investors increasingly turning to gold-related ETFs. Analysts at Deutsche Bank note that there are now two strong sources of demand: central banks and ETF investors. In September, inflows into ETFs nearly reached 100 tons, marking the fastest monthly growth since April, and the total amount of gold in ETFs has approached record levels from the pandemic period, according to data from the World Gold Council.

Uncertainty surrounding U.S. government funding has further propelled gold prices as it is viewed as a hedge against the depreciation of the dollar and political instability in the U.S. If a temporary funding agreement is not reached by Tuesday, the federal government faces a shutdown.

Central banks are also increasing their gold reserves this year, viewing gold as an attractive counterbalance to the dollar. Investors, including hedge funds, have shown record interest – according to data from the U.S. regulatory agency CFTC, speculative positions in gold have reached $73 billion. Analysts emphasize that investors are not backing down as they expect lower interest rates and persistent inflation.

John Reade from the World Gold Council adds that the market is beginning to feel the ‘FOMO’ effect (fear of missing out) – hedge funds that missed the earlier rise in gold prices are now entering to avoid missing the opportunity. The largest growth in investments has been recorded in large, liquid ETFs with higher fees, primarily used by institutional investors.

How Will Gold Prices Move in the Coming Months?

Analysts at investment bank Goldman Sachs predict that by the end of 2025 and the beginning of 2026, the price of gold could reach as high as five thousand dollars. This optimistic forecast is based on factors such as uncertain Fed policy, strong demand from central banks, concerns about inflation, and growing interest from institutional investors.

Other major banks, such as JP Morgan and UBS, predict somewhat more modest figures and believe that gold could reach four thousand dollars by mid-2026. The upward trend is fueled by expectations of interest rate cuts, ongoing purchases by central banks, diversification away from the U.S. dollar, and demand for safe havens amid geopolitical and economic uncertainties.

– Since the beginning of the year, the price of gold has risen by 45 percent, and the cycle of intense growth continues. While now is a favorable time to invest in gold, I like to emphasize that it is always a good opportunity to invest in gold, as gold is a long-term investment aimed at protecting assets from inflation and geopolitical instability, and it should not be viewed as a tool for quick profits. I advise investors to consider strategies such as gradual accumulation and investing at regular intervals to protect themselves from market volatility and inflation risks – said Vladimir Potočki, director of the investment gold sector at Auro Domus group.

Why is the Price of Gold Soaring?

The price of gold is reaching historical peaks due to a number of strong global factors coinciding in 2025.

– First and foremost, the weakening of the U.S. dollar has made gold cheaper for buyers, spurring stronger global demand. Inflation remains above central bank targets, reinforcing gold’s traditional role as a hedge against the loss of purchasing power of paper currencies.

Additionally, investors expect the Fed to cut interest rates to avoid recession risks, which reduces the opportunity cost of holding gold that does not yield returns and increases investments in the metal. Furthermore, geopolitical tensions – from conflicts in Eastern Europe and the Middle East to strained relations among major powers – are pushing investors towards gold as a safe haven – explained Potočki.

Central banks, especially in developing economies like China and India, are ramping up gold purchases to diversify reserves and move away from the U.S. dollar due to fears of global monetary instability. This ongoing accumulation creates supply pressure and supports price growth. Additionally, small investors and gold-related ETFs are entering the market driven by fears of missing out on gains, further amplifying the upward trend.

Main Risks if Gold Reaches $5,000 USD/oz

1. Independence of the Fed and Monetary Policy

If markets conclude that the Fed is losing independence and yielding too much to political pressures, inflation could rise, confidence in U.S. bonds and the dollar could diminish, which could further elevate gold prices but also increase risks of financial instability.

2. Market Correction and Profit Realization

A sudden rise can lead to speculative positions and mass bets in the futures market, opening the door for corrections and increasing volatility.

3. Geopolitical and Economic Stabilization

If major conflicts stabilize or global stock markets continue an upward trend, demand for gold as a safe haven may weaken.

4. Imbalances in Supply and Demand

Changes in mining production or increased recycling of gold could increase availability and lower prices. Central bank strategies could also disrupt the current balance.

5. Currency and Global Economic Conditions

A stronger U.S. dollar could limit gold’s gains. Changes in interest rates and inflation expectations could quickly redirect demand and the direction of price movement.

Brief Overview of Gold Price Movements

In the past month, the price of gold has risen by nearly 12 percent. This is quite a jump, especially considering that the value of gold typically increases by an average of between 9 and 10 percent annually.

– In just the past year, the spot price of gold has risen by 43 percent. Over the long term, this growth is even more pronounced – with a three-year growth of nearly 130 percent and a twenty-year growth of 730 percent, gold remains among the most stable asset classes with the role of the best store of value in an uncertain environment – emphasized Vladimir Potočki, adding that the upward trend in price further intensifies interest in investment gold.

Croatians have recognized investment gold as a long-term investment primarily aimed at preserving the value of money, but also saving for the future. Greater financial literacy among citizens, willingness to explore alternative forms of investment, favorable tax treatment of gold, low interest rates on bank savings and bonds, and the fact that real estate is becoming an increasingly unattainable investment – are some of the main reasons why Croatians are investing more money in the yellow metal.

According to forecasts from Auro Domus, 2025 could be a historic year for the Croatian precious metals market, with Croatians potentially purchasing investment gold worth as much as one billion euros.