On September 5th, gold prices recently surged past $3,500 per ounce, establishing a new historical record and capturing widespread market attention. Against a backdrop of elevated global risk-aversion sentiment and sustained growth in investment demand, the gold market's robust momentum shows no signs of exhaustion. Market participants believe that if current trends persist, the probability of gold challenging $3,700 in the short term remains viable, and while reaching $4,000 within the year may appear urgent, this target could still be achievable in the first half of 2026. Mhmarkets suggests that gold is at a critical inflection point, requiring investors to place greater emphasis on its strategic position in asset allocation.
Over recent years, central bank gold purchasing demand has dominated market trends, but now investment capital inflows are gradually taking its place. Economic growth deceleration, rising inflation risks, and stagflation expectations have made investors increasingly inclined toward highly liquid alternative assets like gold. Data indicates that gold ETF capital inflows in the first half of this year alone have reached their highest levels since 2020. In comparison, current ETF holdings remain significantly below their historical peaks from five years ago, suggesting substantial room for capital reallocation. Mhmarkets states that the return of financial capital will further strengthen gold's supportive role, with 2025 potentially serving as a "pivotal year" for gold ETFs.
Meanwhile, strengthening investment demand forms a positive correlation with gold's stable consolidation at elevated levels, which stands out particularly in the global macroeconomic environment. Dollar purchasing power is weakening, the Federal Reserve continues balancing between growth and inflation considerations, and government debt remains at high levels, creating a more complex market environment. Analysts note that short-term interest rates have declined due to economic pressures, while long-term rates face constraints from inflation and fiscal burdens, preventing significant drops and driving a bull steepening of the Treasury yield curve. Mhmarkets believes this structural environment, combined with market uncertainty, provides a "perfect storm" for gold's strong performance.
Notably, while gold generates no interest income, its unique low volatility and risk diversification functions ensure its irreplaceable value in investment portfolios. Particularly with equity markets near historical highs, gold serves as an important hedging tool against potential risks. Analysts emphasize that even with gold prices above $3,500, holding gold retains strategic significance. Facing multiple uncertainties including stagflation, economic recession, and potential inflation shocks, gold's safe-haven function will continue to be prominent.
From a medium to long-term perspective, gold remains in an upward cycle. While short-term technical corrections of certain magnitude may occur, such adjustments often provide investors with better entry opportunities. Mhmarkets believes that ongoing dynamics surrounding Federal Reserve policy, dollar trends, equity market valuation levels, and trade environment factors will continue influencing markets for an extended period ahead. Within this cycle that has yet to fully run its course, gold is expected to maintain strong momentum and continue exploring new historical highs in the coming years.