What's Driving the Gold Rally?
Gold has captured global attention in 2025, surging to an all-time high of over $3,700 per ounce in September. The precious metal has shown an impressive performance year-to-date, with growth that has already significantly surpassed the full returns of both 2024 and 2023 combined, signalling a powerful shift in the market.
Today, we'll dive into the key drivers behind gold's remarkable performance, from macroeconomic shifts and central bank activity to the growing demand for safe-haven assets in an uncertain world.
Gold's Growth So Far
The precious metal has delivered stellar returns for investors this year. The S&P GSCI Gold index climbed to 2,147 points by September 18, 2025, reflecting a period of intense and sustained buying pressure. Gold has recorded impressive growth across multiple timeframes, with a year-to-date (YTD) return of +39.63%. This momentum has been consistent, with six-month gains at +20.94%, three-month gains at +7.70%, and a one-month return of +8.48%.
To put this in perspective, gold's 39.63% YTD growth is greater than what it gained during 2023 (+12.82%) and 2024 (+26.62%) combined. This powerful rally has prompted major financial institutions to revise their forecasts. Analysts at J.P. Morgan now expect prices to climb toward $4,000 by mid-2026, while Deutsche Bank has also lifted its 2026 forecast to $4,000 per ounce, highlighting the strong fundamental support for the metal.
Why Did Gold Rise in 2025?
Gold's surge in 2025 can be attributed to a powerful convergence of factors, including heightened market uncertainty, persistent inflation, a weakening US dollar, aggressive central bank purchasing, and anticipated monetary easing.
1. Market Uncertainty and Tariffs
In times of economic and geopolitical turmoil, investors traditionally flock to gold as a safe-haven asset. 2025 has been defined by significant uncertainty, largely driven by the rollout of new US trade tariffs.
These policies have sparked fears of a global recession and rattled investor confidence, causing capital to shift from riskier assets like equities into the perceived stability of gold. This safe-haven demand has created a strong floor for the gold price throughout the year.
2. Inflation and a Weakening Dollar
Gold is a well-known hedge against inflation and currency debasement. While inflation has moderated slightly in recent months, it remains above the US Federal Reserve's target, reinforcing gold's appeal as a long-term store of value.
A key catalyst for the rally has been the significant weakening of the USD, which has fallen 10.82% year-to-date. A weaker dollar makes gold cheaper for foreign buyers, adding further momentum to its price and boosting global demand.
3. Central Bank Demand
One of the most significant structural supports for gold has been the relentless demand from central banks around the world.
According to the World Gold Council, central banks have been consistent net buyers, adding 244 tonnes in the first quarter of 2025 and another 166 tonnes in the second. This trend reflects a strategic push by emerging economies to diversify their reserves away from the US dollar and hedge against currency instability.
This steady accumulation has put real pressure on the supply side and established a powerful, non-speculative source of demand for the metal.
4. Monetary Easing
The final piece of the puzzle is the shift in monetary policy. In mid-September, the US Federal Reserve approved its first interest rate cut of the year, reducing its benchmark rate by a quarter point. The Fed also signalled that two more cuts are likely before the end of the year.
Lower interest rates decrease the opportunity cost of holding non-yielding assets like gold, making it a more attractive investment compared to bonds or cash deposits. The anticipation and realisation of this monetary easing cycle have been a primary driver of gold's record-breaking run.
XAUt on VALR
Gold's historic rally in 2025 is the result of a perfect storm of macroeconomic and geopolitical factors. Heightened uncertainty from trade tariffs, a weakening US dollar, persistent central bank buying, and the beginning of a monetary easing cycle have all combined to push the precious metal to new all-time highs.
For crypto investors looking to gain exposure to gold's stability, safe-haven qualities, and diversification potential, VALR offers a seamless solution through Tether Gold (XAUt). XAUt is a digital token that is 1:1 backed by one fine troy ounce of physical gold, held in secure vaults. It combines the reliability of gold with the efficiency and accessibility of a digital asset, allowing you to trade it 24/7 with low fees and without the complexities of physical storage. Adding XAUt to your portfolio can be an excellent way to diversify and hedge against volatility in the broader crypto market.
Ready to add the timeless security of gold to your digital asset portfolio? Create an account on VALR to get started!