Gold prices shine as economic storm clouds gather

3rd Sep 2025 09:37

(Sharecast News) - Gold prices continued to climb on Wednesday, hitting fresh highs, on the back of ongoing political and economic concerns.

Having broken past $3,500 an ounce on Tuesday, as at 0930 BST gold was trading at $3,559. It has now put on 41% over the last year.

Investors are retreating to the safe haven asset on the back of mounting political and economic risks, many of which are centred on the US. In particular, Donald Trump's ongoing clashes with the Federal Reserve - including attempting to remove governor Lisa Cook - has raised concerns over the central bank's independence.

Market watchers now increasingly expect an imminent interest rate cut, despite the likely impact of tariffs on inflation. The dollar has also weakened.

Bonds, meanwhile, have been aggressively sold off globally, with the yield on the 30-year US Treasury reaching 5%.

Kathleen Brooks, research director at XTB, said: "The gold price is reacting to fears about stagflation: high inflation, lower interest rates in the US and sluggish growth.

"Overall, while the bond market remains volatile, we expect gold to remain in vogue."

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Where does capital go when both bonds and equities see heavy outflows? Alternative assets. Gold is breaking records, silver is extending gains and safe haven demand is spilling into the dollar, despite longer-term doubts over its status."

The surge in prices coincided with the World Gold Council confirming it is seeking to launch a digital form of the precious metal.

Gold is static, non-yielding asset. But is widely valued as a safe haven because of its physical nature and lack of counterparty risk.

However, the industry body - which represents gold miners - believes digitising gold would broaden the market.

Confirming the plans in an interview with the Financial Times, chief executive David Tait said the new format would allow traders to "pass gold digitally around the gold ecosystem, as collateral, for the first time".

He continued: "We are trying to standardise that digital layer of gold, such that the various financial products used in other markets can be used in the gold market going forward.

"My goal is that many asset managers around the world will suddenly look at it differently."

The new digital unit - dubbed "pooled gold interests", or PGIs - will be trialled with commercial participants in London during the first quarter of 2026, the FT reported.