Gold rises past inflation-adjusted record: what this means for markets in 2025
12th September 2025
Gold has had a remarkable year so far. As of mid-September 2025, it is up more than 40% in US dollar terms, trading around $3,650–$3,670 per ounce and setting a fresh nominal all-time high earlier this week. More importantly, gold has now pushed through its inflation-adjusted record from January 1980, a milestone that long-time holders have been waiting decades to see. For some, this is a moment of vindication. For others, it raises the question of whether gold has further to run - or whether it has already delivered its best.
What’s driving the rally?
The first and most obvious factor is interest rates. Recent data in the US, including softer producer prices and a cooling labour market, has raised expectations that the Federal Reserve will begin cutting rates in the months ahead. Lower rates mean lower real yields, and for a non-yielding asset like gold, that’s a strong tailwind.
Inflation concerns remain a second driver. Even if “official” inflation prints have moderated, many investors believe underlying price pressures are stickier than they appear. In that sense, gold continues to be used as protection against the erosion of purchasing power.
Add to this heightened geopolitical and fiscal risks. From questions over US fiscal sustainability to global tensions and supply chain vulnerabilities, the world feels less stable than it did five years ago. Central banks have been major buyers of gold, particularly in Asia, reinforcing the sense that gold is being treated as a strategic hedge at the highest levels.
Finally, the technical picture matters. Breaking through both nominal and inflation-adjusted highs is psychologically powerful. Momentum flows into ETFs and futures markets have amplified the move, creating a self-reinforcing cycle.
The first and most obvious factor is interest rates. Recent data in the US, including softer producer prices and a cooling labour market, has raised expectations that the Federal Reserve will begin cutting rates in the months ahead. Lower rates mean lower real yields, and for a non-yielding asset like gold, that’s a strong tailwind.
Inflation concerns remain a second driver. Even if “official” inflation prints have moderated, many investors believe underlying price pressures are stickier than they appear. In that sense, gold continues to be used as protection against the erosion of purchasing power.
Add to this heightened geopolitical and fiscal risks. From questions over US fiscal sustainability to global tensions and supply chain vulnerabilities, the world feels less stable than it did five years ago. Central banks have been major buyers of gold, particularly in Asia, reinforcing the sense that gold is being treated as a strategic hedge at the highest levels.
Finally, the technical picture matters. Breaking through both nominal and inflation-adjusted highs is psychologically powerful. Momentum flows into ETFs and futures markets have amplified the move, creating a self-reinforcing cycle.
The historical context
Looking back, gold has always been a cyclical asset. In the late 1970s it soared on inflation and geopolitical uncertainty following Nixon's unilateral severance of the dollar's redeemability for gold, peaking in 1980 at $850 an ounce - equivalent to around $3,590 today when adjusted for inflation. For decades that peak stood as a reminder of gold’s volatility and the long, grinding returns it can deliver to those who buy at the wrong time.
The 2000s were kinder, with gold delivering more than 10% average annualised returns through to the early 2020s. But even then, many gold advocates pointed out that it had never surpassed the real high from 1980. Now, that barrier has finally fallen. For the “gold bugs” who have held faith in the metal for forty years, this is the validation they have long awaited. Whether or not you agree with their broader narrative, the fact is that gold has finally achieved what was thought unlikely only a few years ago.
What the market is telling us
So what does this price action reveal? At its core, the gold rally is an expression of doubt. Doubt that inflation is truly under control. Doubt that central banks, particularly the Fed, can manage policy without political interference. Doubt that global growth will remain robust in the face of debt, demographics, and disruption.
Investors are willing to pay record prices for an asset that yields nothing and produces nothing, purely because they believe it may hold its value better than the alternatives. That is both a testament to gold’s enduring role in portfolios and a signal that markets see risks on the horizon.
Implications for other assets
The rally in gold doesn’t exist in isolation. For equities, it signals a market more cautious on growth and more focused on inflation resilience. Sectors with pricing power may hold up well, but richly-valued growth stocks could come under pressure. For fixed income, it is a reminder that government bonds are not the only safe haven, and that inflation-linked bonds may warrant more attention. Other commodities, from silver to industrial metals, may benefit from the same trend of investors seeking real assets in uncertain times.
For currencies, the story is similar. A softer US dollar has helped gold’s rise, but if the dollar were to strengthen again, for example, on renewed safe-haven flows, that could cap gold’s momentum.
Looking back, gold has always been a cyclical asset. In the late 1970s it soared on inflation and geopolitical uncertainty following Nixon's unilateral severance of the dollar's redeemability for gold, peaking in 1980 at $850 an ounce - equivalent to around $3,590 today when adjusted for inflation. For decades that peak stood as a reminder of gold’s volatility and the long, grinding returns it can deliver to those who buy at the wrong time.
The 2000s were kinder, with gold delivering more than 10% average annualised returns through to the early 2020s. But even then, many gold advocates pointed out that it had never surpassed the real high from 1980. Now, that barrier has finally fallen. For the “gold bugs” who have held faith in the metal for forty years, this is the validation they have long awaited. Whether or not you agree with their broader narrative, the fact is that gold has finally achieved what was thought unlikely only a few years ago.
What the market is telling us
So what does this price action reveal? At its core, the gold rally is an expression of doubt. Doubt that inflation is truly under control. Doubt that central banks, particularly the Fed, can manage policy without political interference. Doubt that global growth will remain robust in the face of debt, demographics, and disruption.
Investors are willing to pay record prices for an asset that yields nothing and produces nothing, purely because they believe it may hold its value better than the alternatives. That is both a testament to gold’s enduring role in portfolios and a signal that markets see risks on the horizon.
Implications for other assets
The rally in gold doesn’t exist in isolation. For equities, it signals a market more cautious on growth and more focused on inflation resilience. Sectors with pricing power may hold up well, but richly-valued growth stocks could come under pressure. For fixed income, it is a reminder that government bonds are not the only safe haven, and that inflation-linked bonds may warrant more attention. Other commodities, from silver to industrial metals, may benefit from the same trend of investors seeking real assets in uncertain times.
For currencies, the story is similar. A softer US dollar has helped gold’s rise, but if the dollar were to strengthen again, for example, on renewed safe-haven flows, that could cap gold’s momentum.
^ That's right, we did it.
Where do we go from here?
The short-term picture looks favourable. Unless inflation drops sharply or the Federal Reserve surprises markets with a more aggressive stance, the backdrop of lower real yields, central bank demand, and geopolitical uncertainty is supportive.
The longer term is more open. If inflationary pressures persist or if fiscal concerns intensify, gold could continue to climb. If, on the other hand, global growth re-accelerates and monetary policy regains credibility, gold could give back some of its recent gains.
For now, though, the story belongs to those who have waited patiently for decades. Gold has finally delivered a new inflation-adjusted record. Whether this marks the beginning of a sustained higher plateau or just another cyclical peak remains to be seen.
At Brigantia, we continue to see gold as a useful component in a diversified portfolio, not as a core holding but as a strategic hedge. Its current rally reminds us of the importance of building portfolios that can weather different regimes - inflationary or disinflationary, growth-driven or risk-averse.
The short-term picture looks favourable. Unless inflation drops sharply or the Federal Reserve surprises markets with a more aggressive stance, the backdrop of lower real yields, central bank demand, and geopolitical uncertainty is supportive.
The longer term is more open. If inflationary pressures persist or if fiscal concerns intensify, gold could continue to climb. If, on the other hand, global growth re-accelerates and monetary policy regains credibility, gold could give back some of its recent gains.
For now, though, the story belongs to those who have waited patiently for decades. Gold has finally delivered a new inflation-adjusted record. Whether this marks the beginning of a sustained higher plateau or just another cyclical peak remains to be seen.
At Brigantia, we continue to see gold as a useful component in a diversified portfolio, not as a core holding but as a strategic hedge. Its current rally reminds us of the importance of building portfolios that can weather different regimes - inflationary or disinflationary, growth-driven or risk-averse.