Gold price passes $3,600

The price of gold hit another new all-time high of $3,659 on 9 September, having smashed through the $3,600 threshold the previous day.

Investing in gold has been a favoured retreat of befuddled investors trying to make sense of the various market ups and downs that US president Donald Trump’s tariffs have provoked throughout the year so far. But even the safe haven asset isn’t immune to volatility.

The gold price has risen 46% in the 12 months to 9 September and has more than doubled over the past three years. There had been signs that the gold price rally was slowing, with gold trading within the $3,245-$3,450 range throughout most of the summer.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

But September has seen gold prices rise by more than 6% so far, suggesting that the gold rally is regaining momentum. Over the last three weeks (19 August to 9 September), the price of gold has gained over 10%.

“Gold, a traditional safe haven at times of political uncertainty, has soared to a new all-time high,” said Tom Stevenson, investment director at Fidelity International.

The recent stages of the gold price rally have been driven largely by uncertainty over US government policy as Trump’s latest tariff moves and attempts to undermine the independence of the Federal Reserve Bank (Fed) have given investors the jitters.

“Gold is continuing its record run,” said Tom Bailey, head of research at HANetf. “Year to date, gold is outperforming the S&P 500 by over three times.”

Which factors are pushing the gold price up?

Investors often flock to gold during periods of uncertainty as it is viewed as a reliable store of value during turbulent times.

“The drivers are familiar,” says Bailey of the latest gold price surge. “Geopolitical risks abound [and] the Federal Reserve (Fed) is expected to cut interest rates.” Trump is exerting considerable pressure on the Fed to cut rates when it meets next week (16-17 September).

Interest rate cuts are generally a positive for gold prices, because the metal pays no interest.

“The price of gold tends to rise as interest rates fall because the lower yields on rival assets like bonds make gold’s lack of income less of a disincentive to invest,” says Stevenson.

Increased central bank gold purchases were the initial catalyst for the gold price rally.

"From a big picture standpoint, central bank buying of gold has increased over the last few years," says Paul Syms, head of EMEA ETF fixed income and commodity product management at Invesco, "particularly following the start of the Russia-Ukraine conflict which saw a shift in reserve allocation away from the US Dollar and US Treasuries."

The uncertainty caused first by the ongoing conflicts in Ukraine and the Middle East has given further support to gold prices, prompting investors the world over to look for ways to protect their investments.

Could gold prices rise further?

There are still reasons to believe that gold prices could rise further this year. Despite hopes, talks over a peace deal in Ukraine have yielded no breakthroughs as yet.

A Fed rate cut would implicitly be deflationary for the US dollar, in which gold is usually priced. The US dollar index has fallen over 10% so far this year, further boosting the price of gold in dollar-quoted terms.

And expectations of future inflation could also cause an uplift in gold prices, since gold is often viewed as a hedge against inflation.

While acknowledging that forecasting future movements is difficult, Syms believes that the current setup for gold looks positive.

"Central banks are continuing to buy gold," he says, "and investor sentiment has become more positive, with investors appearing to buy dips rather than sell strength.

"Additionally, with rate cuts likely, US Treasury yields and the Dollar could fall, both of which tend to be supportive for gold."

How to gain exposure to gold prices

There are three main ways to invest in gold. The first one is investing in the metal itself through a financial contract, such as an exchange-traded fund (ETF) or exchange-traded commodity (ETC).

Investments into these kinds of products are another factor helping to support gold prices this year.

“European investors are getting involved, having added over $6.5 billion to gold ETCs this year alone, reversing the outflows of 2024,” says Bailey.

See our article on the best gold ETFs for more information.

You can also get indirect exposure by investing in the miners that dig gold out of the ground. This can be done by investing directly in their shares, or by buying a gold fund or investment trust.

While gold miners don’t always rise with the gold price, as other company-specific factors are at play, they have “stolen the show so far” this year, says Bailey.

“Whereas physical gold outperformed miners by a wide margin in 2024, this year gold miners have produced a return almost three times higher,” Bailey adds. “The sustained bull market in physical gold, it would appear, is finally starting to feed through to performance for miners.”

Lastly, you can buy physical gold bars or gold coins.

In terms of how much gold to hold in a portfolio, Stevenson suggests around 5-10% is a good amount – which is about the same as you might hold in cash.

“The two offer insurance and dry powder to complement the growth and stability of the shares and bonds that make up the bulk of a balanced portfolio,” he comments.