Gold reached a new high above US$3,900 per ounce on October 6, 2025, extending its strong rally with a 50% gain so far this year.
After attaining an 11.9% increase in September, the metal now trades just shy of the US $4,000 record, as the dollar struggles to rebound from a 0.02% decline over the same period.
Analysts link the surge to expectations that the U.S. Federal Reserve will cut interest rates twice more before year-end, following its recent 0.25% reduction.
This move brought the federal funds rate down to 4.00%–4.25%, a level that favors borrowing for companies but makes U.S. assets less appealing to investors seeking higher yields.
As investors move away from dollar assets, the greenback weakens, boosting demand for safe-haven investments like gold.
The rally is also being supported by concerns over the U.S. government shutdown that began in early October, after Congress failed to approve a spending bill for the 2026 fiscal year.
- The deadlock, driven by partisan disputes over federal spending, foreign aid, and healthcare subsidies, has further unsettled markets.
With rising uncertainty and a softer dollar, gold is enjoying one of its strongest years in decades, eyeing its record 133% gain of 1979.
Forecast
UBS analysts see as much as 150% upside in gold-related valuations, with the yellow metal projected to reach US$4,500 per ounce in 2026.
Under this scenario, analysts expect EV/EBITDA multiples to expand by 20–40%, suggesting that gold mining stocks “still look cheap.”
This projection follows UBS’s December forecast of US$3,900 per ounce, which materialized in early October. The outlook was detailed in their research report titled “In Gold We Trust.”
In that report, UBS noted that U.S. inflation is likely to remain sticky, and that geopolitical tensions and divisions within the Federal Reserve could weigh on the dollar.
The analysts added that such conditions would continue to drive investors toward safe-haven assets like gold and silver, judging by how negatively they are correlated with the dollar.
Gold/Dollar correlation
UBS noted that gold’s negative correlation with the U.S. dollar remains strong as investors continue to use the metal as a hedge against currency weakness.
To illustrate this inverse relationship, the U.S. Dollar Index is down over 9% year-to-date, giving room for currencies like the naira and cedi to strengthen.
On the flip side, gold is having a fantastic year, up 50%, while silver, another popular hedge, has gained over 67% year-to-date.
Gold, which began the year at US$2,625 per ounce, has closed every month in positive territory except for July, when it dipped 0.40%, a month that coincided with a 3.40% rise in the dollar.
September has been gold’s strongest month so far in 2025, rising 11.9%, but continued bullish momentum might see October surpass that mark.
