Gold Surges Above $3600 Driven by Central Bank Buying, Fed Uncertainty

Gold has experienced a historic bull market in 2025, reaching prices above $3,600 per troy ounce and marking a 26% increase year-to-date, driven by weak U.S. labor data, Federal Reserve rate cut expectations, geopolitical tensions, a weaker U.S. dollar, and robust central bank purchases. Central banks, including the Reserve Bank of India, have significantly increased gold holdings, with allocations rising from around 5-6% to nearly 18-19% of reserves, while investor demand and gold-backed ETFs in North America have surged. Analysts highlight four key factors supporting gold's rally: central bank demand, geopolitical uncertainty, monetary policy easing, and safe-haven buying. Looking ahead, Goldman Sachs projects a potential rise to $5,000 per ounce in 2026 if the Federal Reserve's independence is compromised, reflecting fears over political interference amid economic uncertainty. The broader market sees gold as a critical hedge against inflation, currency debasement, and global instability, with predictions of gold prices reaching $3,700 by the end of 2025 and possibly $4,000 by mid-2026. Overall, gold's role as a store of value is reinforced by ongoing macroeconomic and geopolitical risks, prompting both institutional and household investors to increase their gold allocations.