Gold Surpasses Its Historical Peak

SadaNews - Gold has surpassed its historically adjusted peak, which was recorded more than 45 years ago, amid rising concerns about the trajectory of the U.S. economy, propelling its three-year upward trend to unprecedented levels.

The spot price of gold has risen by about 5% since the beginning of the month, reaching a record level of $3674 per ounce on Tuesday, September 9. In 2025 alone, the yellow metal shattered more than 30 nominal records, but the recent surge has also surpassed the inflation-adjusted peak recorded on January 21, 1980, when prices reached $850 per ounce.

When adjusting for decades of rising consumer prices, that peak amounts to approximately $3590, although various methods of calculating inflation exist, some of which estimate the 1980 peak at lower levels. Despite being a moving target, analysts and investors agree that gold has clearly surpassed it, providing additional momentum as a traditional hedge against inflation and currency weakness.

A Hedge Against Turmoil

Robert Mullen, portfolio manager at Marathon Resource Advisors, stated that "gold is a unique asset with a historical capacity extending over hundreds, if not thousands, of years to fulfill this role." He added that "asset managers face a phase where they have legitimate concerns about levels of deficit spending, in addition to questioning central banks' priorities and their readiness to engage in a real battle against inflation."

The precious metal has risen by about 40% since the beginning of the year, following U.S. President Donald Trump's tax cuts, the expansion of his global trade war, and his pursuit of unprecedented influence over the Federal Reserve. The dollar and long-term U.S. Treasury bonds also experienced a sell-off earlier this year, deepening fears of waning investor appetite for U.S. assets and raising questions about whether U.S. debt is still considered a safe haven during times of turmoil.

When gold reached $850 in January 1980, the United States was suffering from currency depreciation, soaring inflation, and signs of an economic recession. Prices doubled in the two months leading up to that point, after President Jimmy Carter issued an order to freeze Iranian assets in response to the Tehran hostage crisis, increasing fears among some foreign central banks about holding dollar-denominated assets.

Carmen Reinhart, former first vice president of the World Bank and chief economist, stated, "Gold simply reflects a renewed awareness that inflation is still an issue, alongside the prevailing uncertainty in the world." She added, "Its role as a hedge against inflation witnessed its popularity in the 1970s and 1980s, but if we look back to before that period, we find that gold has always played a central role in times of doubt and uncertainty."

The Second Largest Asset in Central Bank Reserves

Compared to the meteoric rise that took gold to its peak in 1980, followed by a sharp decline, the current wave of increases is proceeding at a less volatile pace. This is attributed to high liquidity levels and easier access for investors today, along with an expanding base of new investors compensating for weak demand in traditional channels.

Thanks to the record price increases, the value of gold stored in London vaults surpassed the trillion-dollar mark for the first time last month, also surpassing the euro to become the second-largest asset in central bank reserves worldwide.

Grant Sporre, head of global metals and mining at Bloomberg Intelligence, has restructured his analytical models to account for broader diverse factors driving gold's rise. These models show an overvaluation of the yellow metal compared to historical benchmarks, except for one key aspect: when compared to U.S. stocks, gold still appears cheap, and Sporre believes prices could rise further if stock markets begin to wobble.

He said, "Gold is strikingly expensive, but the market is willing to pay this price for that guarantee of protection."

The Return of Gold After Being Marginalized by Central Banks

This wave represents a strong return for an asset that had long been marginalized by central banks in the 1990s and early 2000s, following the end of the Cold War, the establishment of the eurozone, and China's entry into the World Trade Organization—all factors that ushered in a new era of dollar-centric globalization. As stock markets thrived during that time, many individual investors also turned away from gold.

Today, however, several central banks have returned to buying gold to diversify their foreign currency reserves away from the dollar, and to shield themselves from sanctions targeting U.S. adversaries. Since Russia's invasion of Ukraine and the subsequent freezing of Kremlin assets abroad, gold prices have nearly doubled, and the upward trend has intensified as institutional investors have aggressively entered the market following Trump's inauguration.

Gold has also received additional support from sporadic buying waves in China and from the renewed momentum of popular exchange-traded funds that have facilitated individual investors' access to the precious metal.

Greg Sharino, portfolio manager at Pacific Investment Management, stated that "the shift from a unipolar global system to a multipolar one has strengthened central banks' conviction about the necessity of holding gold." He added that "the wealthy are adopting the same view, and gold has been the biggest beneficiary of the expanding base of investors and growing asset diversification."

Bets on Interest Rate Cuts

Over the past two weeks, gold prices have risen again, surpassing their historical peak recorded in April, after a period of trading within a narrow range. This recent breakout coincided with rising bets among investors in financial markets that the Federal Reserve would soon begin lowering interest rates to avoid slowing employment and the potential for the economy to enter a recession.

Historically, interest rate cuts have been a supporting factor for gold's appeal compared to income-generating assets like Treasury bonds, while putting pressure on the dollar. As Trump escalated his unprecedented attack on the Fed's independence, gold bulls became more hopeful about the possibility that the central bank would be forced to cut rates aggressively, even amidst growing inflation risks.

When similar dynamics occurred in the early 1970s, when the dollar came under pressure from then-President Richard Nixon's push on the Fed to keep rates low despite rising inflation risks, it helped unleash a massive gold rally, boosted by the double oil shock of that decade, ultimately driving prices to $850.

Jim Rogers, co-founder of the Quantum Fund alongside George Soros, who began buying gold in the early 1970s, stated, "I saw what was happening in the world: every country drowning in massive debt, and every country printing money and weakening its currency." He added, "I realized that gold and silver are ways to protect yourself in such times."