The gold price initially clearly surpassed the psychologically important mark of USD 4,000 per ounce – but could not maintain it in yesterday’s trading. However, after the August breakout, the yellow metal also rose by approximately USD 670 per ounce in just two months, representing an increase of more than 20%. In the interim, gold was even up more than 50% year-to-date. This dynamic attracts further investors – but at the same time increases the risk of short-term profit-taking, as analysts note.
Gold: Strong Rally since August, Short-Term Risks Increasing
TD Securities from Canada, for example, speaks of an overheated market. Gold appears technically “overbought,” so any news that questions the pace of monetary easing or fuels volatility could trigger a noticeable counter-movement. In such a scenario, a significant correction of the late summer rally is conceivable. As a possible target zone, analysts name a pullback to approximately USD 3,600 per ounce.
At the same time, the medium- to long-term direction remains intact from their perspective: The recent upward phase is driven not only by technical chart factors but also by structural demand impulses. Crucially, whether the current drivers – falling real interest rates, net inflows from institutional investors, and sustained purchases by the official sector (central banks) – will continue.
Gold and Monetary Policy: Fed Easing, Real Yields, and Investor Positioning
According to TD Securities, the central driver for gold is the renewed easing cycle of the US Federal Reserve. With falling short-term interest rates, the holding costs for non-interest-bearing assets like gold decrease. Many fund managers who missed the early part of this year’s rally due to high money market rates entered the market in the late summer months – also in anticipation of further declining carry costs.
Additionally, there is a monetary policy risk: Melek sees the possibility that political pressure could prompt the Federal Reserve to implement more aggressive interest rate cuts. Consequently, real yields would be dampened – a constellation that historically favors gold. The debate also includes the question of de facto tendencies towards the (partial) monetization of US government debt; an environment where inflation persists above target would further burden real returns and strengthen gold’s role as a store of value.
Central Banks as Support: China Moves into Focus in the Gold Market
Another pillar of demand comes from the vaults of central banks. TD Securities expects the official sector – led by China – to further expand its holdings, thereby continuing the strategic diversification away from the US dollar. Despite an intensified purchasing program since 2022, gold currently accounts for only about 7.6% of the People’s Bank of China’s total foreign exchange reserves, for example. For comparison: In the US, gold accounts for nearly 75% of reserves.
Against this backdrop, Melek points to a theoretical lever: If China were to increase its gold share of FX reserves by 10%, this would correspond – calculated at current prices – to an additional purchase volume of approximately 2,600 tons. Such a magnitude, if diversification is consistently pursued, could only be realized over years and would sustainably shape the physical market.
Outlook for Gold: Short-Term Correction Potential, Structural Supports Remain
Despite the increased risk of a setback, TD Securities outlines a constructive path for gold in the coming quarters. Short-term periods of weakness are viewed as potential opportunities given an intact upward trend. For the coming year, the firm expects an average gold price of around USD 4,250 per ounce. Furthermore, analysts expect new record levels “north of USD 4,400 per ounce” in the first half of 2026, driven by further declining key interest rates, sustained purchases by the official sector, and renewed long positioning by discretionary funds.
For market observers, this presents a two-pronged picture: On the one hand, there is the risk of a technically driven correction in an already exhausted momentum environment. On the other hand, the key fundamental factors – real interest rates, central bank demand, portfolio diversification – remain intact. It will be crucial how quickly the Federal Reserve actually pursues its easing path and whether macroeconomic uncertainties (inflation, fiscal policy, growth) reinforce the hedging motivation.
Conclusion: Gold has opened a new chapter by jumping above USD 4,000 per ounce. Short-term fluctuations are more likely against this backdrop – but the key drivers behind the rally, from monetary policy to central bank purchases, remain in place. Therefore, the pace of Fed easing, the development of real yields, and the strategic demand from major players will be crucial for price formation in the coming quarters.
