Interest rate cut expectations reshape asset patterns: Gold strongly breaks through the $3,700 mark, Goldman Sachs aggressively raises its forecast to $5,000

According to Zhitong Finance APP, driven by the rising expectations of interest rate cuts by the Federal Reserve, gold prices experienced a historic breakthrough on Tuesday local time—spot gold surged to $3,702.84 per ounce in the morning session, breaking the $3,700 mark for the first time and setting a new historical high. Although it later retreated to around $3,685, it still remained above the record high set the previous day; during the same period, U.S. gold futures also soared to $3,739.90 before undergoing a technical correction.

The core logic behind this surge lies in the market's strong expectation that the Federal Reserve will initiate interest rate cuts this week: the U.S. dollar index has fallen to its lowest level since July, combined with weak labor market data and no unexpected inflationary pressures. Traders are not only betting on a rate cut in September but also expect further monetary easing before the end of the year, with a low-interest-rate environment significantly benefiting gold, a non-yielding safe-haven asset.

OANDA analyst Zain Vawda emphasized that although global economic uncertainty and geopolitical risks continue to drive up safe-haven demand, this round of gold price increases is largely driven by market expectations of significant interest rate cuts by the Federal Reserve.

Since the beginning of this year, gold prices have surged by 41%, far exceeding the performance of major assets such as the S&P 500 index, and have surpassed the inflation-adjusted historical peak of 1980.

Specific data shows that since hitting a 52-week low of $2,564.30 on September 17, 2024, gold prices have increased by 43.86%; compared to the settlement low of $2,638.40 on January 6, 2025, it has risen by 39.82%; so far this month, the increase is 6.20%, and year-to-date, it has risen by $1,059.70 per ounce, an increase of 40.31%.

Analysts point out that this round of increases is supported by multiple factors: continuous central bank gold purchases, inflows of safe-haven funds, and the global de-dollarization strategy working in concert. Bank of America Research specifically noted that the current U.S. inflation rate of 2.9% combined with the Federal Reserve's accommodative policy constitutes a historically favorable combination—since 2001, gold prices have never declined during periods when inflation was above 2% and the Federal Reserve maintained a dovish stance.

Institutional bullish sentiment is high, with UBS raising its year-end gold price target to $3,800, while Goldman Sachs has made a more aggressive prediction: if the private sector converts 1% of U.S. Treasury holdings into gold, gold prices could approach $5,000. The market is re-evaluating gold's traditional role as a store of value, with investors seeking asset protection amid stagflation and currency depreciation risks