Gold Is Looking for Another Way Up

Gold prices climbed 1.1% to $3,627 per troy ounce this week, setting a new all-time high at $3,674 — the fifth record in the past eight trading sessions. This pace of gains is forcing investors to weigh the possibility of further upside. A sustained hold above $3,600 could extend the rally toward the extreme target of $3,850–$3,950.

On a three- to six-month horizon, however, current levels appear overstretched. Bullion has not been this extremely overbought since 1975. Yet in the near term, momentum remains strong and the news backdrop continues to support higher prices.

The breakout from the summer consolidation range of $3,250–$3,450 last week unleashed a 6.6% surge, driven by a mix of geopolitical and macroeconomic factors. Tensions escalated as U.S. President Donald Trump raised import tariffs on India to 50% and urged EU countries to impose 100% tariffs on China and India in response to their purchases of Russian oil. These developments have encouraged central banks to accelerate diversification of reserves into gold.

In the U.S., the labour market is clearly cooling. Nonfarm Payrolls for August dropped to 22,000, the lowest since October 2024, while unemployment rose to 4.3%. A revision to employment data from April 2024 through March 2025 cut 911,000 jobs versus the expected 680,000, amplifying recession fears.

The Producer Price Index (PPI) provided another boost. Headline PPI dropped to 2.6% YoY from 3.1%, while Core PPI fell to 2.8% YoY from 3.4%, defying expectations for an uptick. These disinflationary signals all but confirm a 25 basis point Federal Reserve rate cut in September, while markets assign an 8.0% probability to a deeper 50 basis point cut.

The focus now shifts to Thursday’s CPI release, the final major datapoint before the Fed meeting. Consensus calls for an increase to 2.9% YoY from 2.7%. If inflation undershoots, bets on a 50 bp cut could surge, pressuring the Dollar and propelling gold back toward record highs. A confirmed breakout above the $3,500–$3,600 zone could trigger a run at the $3,850–$3,950 target.

Large investors remain active but cautious. After a record $2.3 billion inflow into the SPDR Gold Trust (GLD) ETF two weeks ago and an additional $451.9 million last week, they have trimmed exposure with $264.8 million in sales over the past three days. Even so, positioning remains heavily long, indicating that institutional players still see further upside, while tactically reducing risk ahead of U.S. inflation data and next week’s Fed meeting.