Gold prices soared to record highs on Monday, reaching $3,724.90 per troy ounce.
Gold’s 39% price jump this year puts the precious metal on track for a greater annual price increase than during the depths of the Covid-19 pandemic or 2007-09 recession https://t.co/cRrANDNV4f via @WSJ
— Gunther Schnabl (@GuntherSchnabl) September 15, 2025
The rally comes amid growing fears of stagflation in the US economy and expectations of an interest rate cut by the Federal Reserve this week. Stagflation occurs when the economy experiences high inflation, high unemployment, and slow growth at the same time.
State Street head of gold strategy, Aakash Doshi, said, “The risk of stagflation has increased. That is a perfect environment for gold.”
Gold price hits record high of Rs 110500; check target, strategy as FED meet starts today#gold #goldpricetoday #goldprices https://t.co/2T1BcdWhxr
— ET NOW (@ETNOWlive) September 16, 2025
Gold tends to perform well during times of economic uncertainty and lower interest rates.
#WATCH | Gold’s stellar run continues, hitting fresh records as Fed rate cut bets grow & geopolitical tensions keep investors rushing to the yellow metal#Gold #Markets #Investing #Commodities @Ashesha_A pic.twitter.com/oukWzUxdpT
— ET NOW (@ETNOWlive) September 16, 2025
With inflation still above the Federal Reserve’s long-term target of 2.0% and a shaky labor market, investors are turning to gold as a safe haven.
The Federal Reserve is widely expected to lower rates by 25 basis points at its meeting this week.
Gold Hasn’t Rallied This Much Since 1979
A 39% price jump this year outpaces Covid-19 pandemic, 2007-09 recession
https://t.co/Z0zOpT4ZTB via @WSJ
— Amit Paranjape (@aparanjape) September 15, 2025
Gold prices surge on stagflation worries
If this happens, the rationale for holding gold could climb even higher, as bullion becomes more attractive compared to government bonds when rates are low.
The dip in the dollar ahead of the Fed’s meeting has also contributed to gold’s record-breaking performance. Investors and financial experts are closely watching for indications of future monetary policy adjustments. Columbia Business School economist Brett House blames President Trump’s policies and their erratic implementation for the current economic situation, stating, “Last week’s developments mean that economic expectations have been turned around.
We’ve seen growth forecasts for the remainder of this year cut substantially, and inflation forecasts pushed up.”
The real US interest rate, as implied by the yield on inflation-protected 10-year TIPS bonds, fell to a 2-year low of 1.67% per annum on Monday. This suggests that debt traders expect the cost of living to rise faster while the US central bank cuts the cost of borrowing, a pattern consistent with the stagflation outlook. Nicky Shiels, head of metals strategy at Swiss refining and finance group MKS Pamp, predicts, “It’s more likely a dovish 25 basis point cut versus a hawkish 50bp cut at this week’s US central bank meeting.” The Fed is balancing dual mandate risks between supporting growth and curbing inflation.
As the economic situation continues to develop, investors are keeping a close eye on gold prices and the Federal Reserve’s actions to navigate the uncertain landscape.
