The gold market already set new benchmarks in September 2025. According to a recent market report by the World Gold Council (WGC), the gold price marked its 39th all-time high of the year and closed the month at $3,825 per ounce. This represents an increase of approximately 12% compared to August and a gain of 47% year-to-date. In parallel, gold exchange-traded products (ETFs and ETPs) recorded the highest monthly net inflows since records began: $17.3 billion, equivalent to approximately 146 tonnes – predominantly from North America and Europe. For investors, this adds another building block that underscores the precious metal’s special role in portfolios, without, however, ignoring short-term risks.
Gold Reaches Record Level – and Attracts Capital
The combination of new highs and massive ETF inflows demonstrates the current strong demand for gold. While physical purchases traditionally react more slowly, ETFs reflect the market’s shorter-term pulse – a reason why the September figures are noted as a sentiment barometer. Notably: A brief pullback on September 30 was quickly absorbed by purchases, according to WGC data. This indicates a broad demand base, likely driven by both hedging and diversification motives.
In the institutional segment, it is notable that inflows were dominated by two core regions: North America and Europe. Historically, such movements often coincide with periods of increased uncertainty in equity and foreign exchange markets. Furthermore, the development of the US dollar plays a central role for gold as a globally traded asset – for example, in the XAUUSD pair or via futures markets like COMEX futures.
Drivers of the Recent Gold Rally: Politics, Dollar, Options
The report cites geopolitical tensions, the weakness of the US dollar, and activity in the options market as the main factors behind the September rally. Firstly, political uncertainty regularly increases demand for safe havens. Secondly, a weaker dollar tends to favor higher gold prices, as the precious metal is denominated in USD. Thirdly, options flows – such as hedging strategies by institutional investors – can temporarily amplify price movements.
At the same time, the WGC report cautions: The US dollar is currently considered “heavily oversold”. Should a counter-movement occur, this could put short-term pressure on gold. Additionally, there is the question of whether the precious metal might be tactically overbought. In previous phases of very dynamic increases, timely consolidations were observed – an aspect market participants should keep in mind. However, this changes little for gold’s longer-term role as a diversifier in multi-asset portfolios: correlations with equities and bonds remain low to moderate in the medium term.
Gold as a Hedge: Long-Term Diversification, Short-Term Question Marks
From a portfolio allocation perspective, gold continues to function as a building block for diversification and as potential short-term protection against equity declines. However, the report points out that in very tactical time horizons – for example, around significant turning points in equity markets – not every decline in equity markets is accompanied by a simultaneous rise in gold. Differences in triggers (interest rates, liquidity, currency) and the positioning of institutional investors can lead to divergent reactions in the short term.
Another anchor of stability remains the demand from central banks. In recent years, they have repeatedly used price declines to increase their holdings. Such a “buy-the-dip” tendency can stabilize the market at important support zones, even if it does not eliminate short-term fluctuations. In summary, a picture emerges in which gold is used both as a strategic asset component and as a tactical instrument – each with different time horizons.
Outlook for October: Historically Volatile Equity Markets and the Role of the US Dollar
October is traditionally considered a month in which larger equity corrections are not uncommon. This increases underlying market nervousness – and draws attention to gold as a potential hedge. At the same time, valuations are high, which increases sensitivity to headwinds – such as a dollar recovery or altered interest rate and inflation paths. Political tensions, trade conflicts, and inflation fears remain present as potential catalysts.
For the further course, several aspects are therefore crucial: Firstly, whether the US dollar undergoes a technical recovery, thereby creating headwinds for gold. Secondly, whether ETF demand continues after the record September or takes a pause. Thirdly, whether central banks and long-term oriented investors re-emerge as buyers during pullbacks.
Conclusion: Gold has delivered an exceptional performance so far in 2025, underpinned by new highs and strong ETF inflows. October traditionally brings increased equity volatility – an environment in which gold remains in focus as a diversification component and hedging instrument. Short-term risks – particularly a potential dollar stabilization and tactical overbought signals – are, however, part of the picture. It will be crucial to see how sensitively demand reacts to price movements and whether structural support from central banks and institutional investors persists. However, the gold price initially surpassed the $4,000 per ounce mark at the beginning of October.
