In September, gold rose to new all-time highs, approaching USD 3,700 per oz. The upward move reflected several factors.

First, US President Donald Trump fired the head of the Bureau of Labor Statistics and also moved to fire Federal Reserve board member Lisa Cook. Trump’s actions have raised concerns about the independence of US economic institutions. The implication is that interest rates may be held at inappropriately low levels for an extended period, making gold even more appealing.

Second, US labour market data deteriorated and the US 2–30-year yield curve steepened as a result of this. The steeper yield curve implies imminent Fed rate cuts in the near term and higher inflation levels over the longer term. Gold will benefit from such a scenario, because it implies that real inflation-adjusted interest rates will decline. This is already evident to a small extent, and we think that threshold effects will kick in if real yields (proxied by 10-year TIPS yields) fall to levels of below 1.50%.

We note that long-end yields have continued to rise in most advanced economies and this dynamic also reflects rising term premia, which is the extra compensation that investors demand for increased inflation and interest rate volatility. Causation is key in this regard, because gold will respond positively to an environment of rising term premia, especially if the driver is increasing inflation expectations.

Central bank gold purchases are likely to be a supportive factor in the current environment rather than a driver of higher prices, and we note that declines have been very shallow in recent months, supporting the idea that the gold market is very well bid.

Retail investments into gold-focussed ETFs have seen seven months of consecutive inflows and we think that there is ample space for this trend to continue in the coming months. Institutional investors have steadily increased their long gold exposures since the April drawdown; however, positioning here is by no means stretched.

The large rise in prices has resulted in a decline in jewellery fabrication demand and this has also supported platinum prices through substitution effects. We do not believe that this phenomenon will affect continued price rises, because central bank purchases more than offset the fall in fabrication demand. The upshot of these developments is that continued price rises are to be expected. We think that gold will rise to levels of around USD 4,000 per oz by mid-2026.

Rising gold prices have also served to drag silver towards higher levels of above USD 40 per oz. The gold–silver relationship remains at multi-decade highs, implying further upside risks to levels of around USD 44 per oz by next year. However, we have some concerns about the demand outlook given severe overcapacity in the Chinese photovoltaic sector and still-stunted auto demand around the world. Consequently, we are not minded to chase the silver move much higher than our targets given the opaque demand outlook.

The opinions expressed herein are correct as at 16 September 2025 and are subject to change without notice. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.