Tianfeng Securities: Gold surges to $3,600, with room for further upside this year

According to the Zhitong Finance APP, Tianfeng Securities released a research report stating that the gold market has not yet ended, and there is still upward space within the year. The four major factors driving gold prices are likely to continue this year: First, whether the independence of the Federal Reserve can be maintained will be a key point in the fourth quarter. Second, expectations for interest rate cuts may continue to unfold. Third, the uncertainty of tariffs is difficult to resolve; if IEEPA tariffs are hindered by legality, it is expected that the White House may turn to expand the scope of industry tariffs. Fourth, the long-term trend of "de-dollarization" continues, with official institutions in various countries increasing their holdings, which will be the underlying support for gold demand. It is expected that against this macro backdrop this year, private sector demand for gold will also remain strong, and gold ETFs will maintain their popularity to attract capital inflows, supporting gold prices to continue reaching new highs.

The main points of Tianfeng Securities are as follows:

Spot gold has reached a new high, and futures gold has surged to $3,600 per ounce. As of September 2, 2025, gold has risen for six consecutive trading days, with spot gold hitting a historical new high; New York gold futures have surged to $3,600, accumulating a 36% increase since 2025. Gold and silver have become the best-performing assets this year, significantly outperforming major global equity assets and far ahead of other commodities.

Four major driving factors for gold reaching $3,600

1. Crisis of the Federal Reserve's independence

Since August, concerns about the independence of U.S. monetary policy have significantly intensified. On August 26, Trump stated that he would soon have a "majority" of members appointed by him on the Federal Reserve Board. If the independence of the Federal Reserve is lost, it could lead to increased risks of stagflation, exacerbated debt issues and fiscal concerns, weakened dollar status, and capital flight. The U.S. stock, bond, and currency markets have all been hit, with funds flowing into safe-haven assets. Trump has intervened to some extent in almost all seven positions on the Federal Reserve Board.

2. Rising expectations for Federal Reserve interest rate cuts, declining rates

The rising expectations for Federal Reserve interest rate cuts are also one of the main drivers of gold prices recently. In the ten interest rate cut cycles since 1980 (including the current cycle starting in September 2024), gold has risen seven times. Gold is a non-yielding asset; when interest rates decline, the returns on bonds and other yielding assets decrease, thereby reducing the opportunity cost of holding gold and increasing demand for gold. The current market estimates a 91.7% probability of a 25 basis point rate cut in September, up from only 75% before the JH meeting on August 22.

3. Uncertainty in geopolitical and economic outlook, safe-haven demand

Regarding tariff policies, on August 29, the federal appeals court ruled that Trump's tariffs imposed under IEEPA were illegal, which involves Trump's "reciprocal tariffs" on various countries, a global 10% baseline tariff, and tariffs on China and Canada/Mexico based on fentanyl and border issues, all of which may be overturned. Trump stated that he would soon appeal to the Supreme Court.

Industry tariffs are also a constant threat, as Trump has repeatedly stated that he will impose high additional tariffs on industries such as pharmaceuticals, furniture, and semiconductor chips. In addition, the exemption for small package tariffs has been canceled, and U.S. officials have stated that a uniform tariff of $80 to $200 will be imposed on small packages In addition to tariffs, measures such as tightening healthcare and student loans in the "Great Beauty Act," government layoffs and spending cuts, and stalled negotiations in the Russia-Ukraine conflict have all fueled market concerns about future uncertainties.

4. Erosion of confidence in the US dollar and US Treasuries, global central banks buying gold

The first three factors are catalysts for the recent rise in gold prices, while the fourth factor, "de-dollarization," is the underlying support for the rise in gold over the past two years. Due to record purchases by global central banks, gold has replaced the euro in 2024 as the second-largest reserve asset for global central banks, second only to the US dollar.

With rising uncertainty in US policies and increasing fiscal concerns, especially recently, Trump's "vision" of generating fiscal revenue through tariffs has also faced challenges. Market confidence in the US dollar and US Treasuries has weakened, accelerating "de-dollarization" and boosting gold demand.

Outlook for Gold Prices

The gold market is not yet over, and there is still upward potential for the year. The four major factors driving gold prices are likely to continue throughout the year:

First, whether the Federal Reserve can maintain its independence will be a key point in the fourth quarter. Trump is expected to announce a new chairman candidate around November-December, and the results for the two board positions of Milan and Cook will also be revealed. Hassett and Milan both have a distinct MAGA flavor, and if they enter the Federal Reserve, their statements may attract market attention.

Second, expectations for interest rate cuts may continue to play out. Weak employment data, coupled with Trump's intervention in the Federal Reserve, is expected to lead the market to continue anticipating a further interest rate cut cycle in 2026.

Third, the uncertainty surrounding tariffs is difficult to resolve. If IEEPA tariffs are hindered by legality, the White House may turn to expand the scope of industry tariffs.

Fourth, the long-term trend of "de-dollarization" continues, with official institutions in various countries increasing their holdings, which will be the underlying support for gold demand.

It is expected that under this year's macro backdrop, private sector demand for gold will remain strong, and gold ETFs will maintain their popularity, attracting capital inflows and supporting gold prices to continue reaching new highs.

Risk Warning: Federal Reserve monetary policy exceeding expectations, US economic fundamentals exceeding expectations, Trump's economic policies exceeding expectations