Since the beginning of 2025, gold has delivered exceptional performance, outperforming most other asset classes. The precious metal’s price has risen by more than 28% since the start of the year, supported by growing expectations of US interest rate cuts, declining real yields on bonds, and escalating geopolitical and global trade tensions. Strong demand waves from central banks, especially in emerging economies, have also pushed prices to new record levels near $3,500 per ounce, approaching its all-time high.

This performance reflects gold’s shift from merely a defensive asset to a key strategic tool in risk management and wealth protection amid an uncertain and turbulent economic environment.

For the first time since 1996, gold’s share in global central bank reserves has exceeded their holdings of US Treasury bonds, with the precious metal now accounting for between 25% and 27% of total reserves, compared to about 23% or less for US bonds, according to the latest estimates. This shift reflects a growing global trend towards asset diversification and reducing reliance on the dollar as the dominant reserve currency, amid financial pressures from rising US public debt and increasing budget deficits. Strategically, this change is not just a swap in reserve components but signals a deeper trend towards reshaping the global financial system, with gold reclaiming its position as a central asset in central bank policies.

For comparison, between 2008 and 2015, this ratio ranged between 10% for gold and 30% for US Treasury bonds, before the landscape radically shifted in favor of the yellow metal in recent years.

Recent political and economic moves have accelerated this shift. The 50% tariffs imposed by Washington on India signaled a deepening East-West divide, boosting emerging economies’ push to build reserves based on gold and precious metals as part of a “dollar abandonment” process or at least reducing its absolute dominance over the global financial system.

Recent US labor market data have further complicated the picture. Despite ongoing job creation, the economy added only about 73,000 jobs in July, with unemployment rising from 4.1% to 4.2%, while wage growth remained at 3.9% annually. This mix of slowing employment and wage pressures heightens fears of a stagflation environment, pushing investors and central banks to increase reliance on gold as a strategic option to offset declining confidence in the dollar and US debt instruments.

Growing expectations that the Federal Reserve will cut interest rates in September added further momentum to gold’s movements. Futures markets currently price in over an 80% chance of a 25 basis point cut at the September meeting, with larger cuts also possible but less likely. This comes amid unprecedented political pressure on the Fed from the White House, alongside recent signals from Jerome Powell opening the door to monetary easing. This scenario is reflected in the US yield curve, where yields on two- and ten-year bonds have fallen, signaling increased bets on slower economic growth. In such an environment, characterized by low real yields and declining dollar appeal, gold remains the primary beneficiary as a strategic asset for hedging and value preservation.

Amid this complex backdrop, attention this month focuses on the US jobs report on Friday, September 5, 2025, which will provide clearer signals about labor market strength and the extent to which stagflation fears are growing. However, the most significant event remains the Federal Reserve meeting on September 16-17, as investors await a potential interest rate cut for the first time in over two years. Between inflation pressures, slowing growth, and geopolitical divisions, these two events will determine the short-term path for financial markets, with gold remaining the top candidate as the investment compass amid all this uncertainty.