Gold’s Momentum into Year-End
Now that we’ve passed the exact midpoint of the year, gold is holding firm, hovering around $3,300 an ounce. Despite global challenges, commodity analysts see limited downside ahead. Economic uncertainty from tariffs and soaring government debt is fueling demand for gold as a safe haven. With these forces unlikely to fade soon, gold’s resilience looks set to continue.
Why Gold Remains Strong
One of the biggest reasons gold continues to shine is ongoing economic uncertainty. Two major sources of uncertainty are at play: tariffs and debt.
Tariffs have added inflationary pressures that could take months to fully affect consumers. Potentially higher inflation along with slowing growth is raising concerns about stagnation. Meanwhile, U.S. government debt has surpassed $37 trillion. New budget legislation is expected to increase the deficit by nearly $4 trillion over the next decade. These fiscal concerns have kept long-term bond yields high and driven the U.S. dollar to multi-year lows.1
As the World Gold Council recently put it:
“With the passing of the One Big, Beautiful Bill, the US is staring down an additional US$3.4 trillion in debt over the next decade — and a US$5 trillion lift to the debt ceiling … and the risks, both fiscal and political, are stacking up.”2
Federal Reserve, Central Banks, & Gold
Investors have also grown nervous about the independence of the Federal Reserve and the long-term stability of the dollar. Business and consumer confidence in the economy have both been hurt by this uncertainty. These growing risks have already triggered a global reallocation of capital as investors move away from the weakening dollar and into gold.
As the dollar declines, gold tends to move inversely, rising as the dollar weakens. This relationship underscores gold’s role as a hedge against a weakening currency. The chart below illustrates another key dynamic: gold prices and real interest rates are also inversely correlated, highlighting gold’s appeal when real rates fall.
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In addition, the gap between U.S. government bond yields and interest rate swap rates is widening. An interest rate swap rate is the fixed interest rate that one party agrees to pay in exchange for receiving a floating (variable) rate. The widening gap reflects how investors are growing wary of buying government debt at current prices.
Central Banks Keep Buying
Central banks have also been a powerful force supporting gold. According to the World Gold Council:
“Central bank buying and the acceleration of those purchases that we have witnessed since 2022 is a big factor in gold’s strength… The reasons for this increased appetite from emerging market central banks for greater gold reserves are multiple, e.g., diversification, geopolitical risks, and gold’s performance in periods of crisis.”4
Central banks’ gold holdings now represent about 18% of the outstanding U.S. public debt, up from 13% a decade ago. By the end of 2024, gold is estimated to account for 20% of the world’s total reserve holdings, surpassing the euro and second only to the dollar.5
Bank of America sees $4,000 Gold
Interest in gold picked up again in June and July, with both futures contracts and gold-backed funds reaching new highs. The total dollar value of gold exchange-traded products hit a record $383 billion at the end of June. And Bank of America sees this demand continuing.
Bank of America analysts see gold reaching $4,000 an ounce within the next year. They cite the ballooning U.S. fiscal debt as the main driver. Gold has already risen nearly 30% this year, fueled by trade tensions and rising geopolitical risks.6
B of A noted that while geopolitical conflicts can temporarily boost gold, they aren’t considered a long-term growth driver. For example, gold dipped 2% in the week Israel began its airstrikes on Iran, showing that underlying fiscal and economic concerns have more lasting impact.
Bank of America also indicated that the market is not yet overexposed. They pointed out that investors currently allocate just 3.5% of their portfolios to gold. Suggesting there is room for further growth.
What Do Other Banks Say?
Leading banks have issued bullish, though varied, forecasts for gold in the next 12–18 months:7
- HSBC: Raised its 2025 forecast to $3,215/oz, expecting a volatile range of $3,100–$3,600/oz, citing geopolitical risks and strong investor demand.
- Goldman Sachs: Projects gold to reach $3,700/oz by end of 2025 and $4,000/oz by mid-2026, with potential upside to $4,500 in extreme scenarios.
- Deutsche Bank: Forecasts an average of $3,139/oz for 2025 and $3,700/oz for 2026, driven by economic and geopolitical developments.
While predictions vary, the overall outlook remains positive due to continuing fiscal, political, and economic risks.
Conclusion
Uncertainty, volatility, and growing demand are likely to keep pushing gold prices higher. With the dollar weakening, debt levels rising, and confidence in traditional investments shaken, now is a good time to protect your retirement savings with physical gold held in a Gold IRA. Call American Hartford Gold today at 800-462-0071 to learn how you can take advantage of gold’s strength and safeguard your future.
