Gold FOMO could push metal to $4,000
News Summary
Gold's upward momentum shows no signs of slowing, with some analysts predicting another record milestone for the precious metal. Aakash Doshi, head of gold strategy for State Street Investment Management, suggests that in the current "Fear of Missing Out" (FOMO) environment, gold breaching US$4,000/oz+ is a question of 'when' not 'if', assigning a 75% probability by 4Q 2025 or early 2026. Gold has recorded its seventh consecutive week of gains, hitting an all-time high of $3,880.8 an ounce, bringing its year-to-date advance to over 47%. Ongoing drivers include uncertainty over the government shutdown, a weaker U.S. dollar, and anticipated interest rate cuts by the Federal Reserve. The CME's FedWatch Tool indicates expected rate cuts in October and December. Doshi emphasizes that the Fed's resumption of its rate-cutting cycle will support gold through two key channels: (1) reduced opportunity cost of holding gold as a non-yielding asset, and (2) potential bull steepening in the US Treasury curve, which tends to weaken the U.S. dollar. Global gold exchange-traded fund (ETF) inflows this year are the best since 2020, and physical holdings remain below pandemic peaks, suggesting further buying potential, with ETF inflows being a primary factor driving record prices.
Background
Gold traditionally acts as a safe-haven asset, often performing well during periods of global economic and geopolitical uncertainty. Its price is closely linked to real interest rates, the strength of the U.S. dollar, and market inflation expectations. In 2025, the U.S. is navigating a distinctive macroeconomic landscape: the incumbent Trump administration faces potential budget impasses or government shutdown risks, contributing to market uncertainty. Concurrently, the Federal Reserve, following a period of tightening, is anticipated to embark on a rate-cutting cycle, which reduces the opportunity cost of holding non-yielding gold. A persistently weaker U.S. dollar also makes dollar-denominated gold more attractive to international buyers. These combined factors provide a robust macroeconomic backdrop supporting further appreciation in gold prices.
In-Depth AI Insights
What are the deeper implications of gold's "FOMO"-driven rally, and how does this differ from purely fundamental drivers? - FOMO-driven demand suggests that beyond traditional fundamental factors like a weaker dollar, rate cuts, and geopolitical uncertainty, investor sentiment – specifically the fear of missing out on potential gains – is amplifying gold's ascent. Such sentiment-driven rallies can be more volatile than those based purely on fundamentals, carrying a higher risk of sharp corrections if market sentiment shifts or adverse news emerges, as sentiment often works both ways. Considering President Trump's re-election, how might his administration's policies and style potentially interact with the key drivers (dollar and rate cuts) underpinning gold's predicted rally? - The Trump administration is likely to continue pursuing