Central Banks Fuel Gold’s Record Run—Can the $4,000 Barrier Hold? – ( $GLD $GS $JPM $SPY )

By John F. Heerdink, Jr.

Gold’s relentless rally has nudged the precious metal to the brink of $4,000 per ounce, carving out its biggest annual advance since 1979 amid political upheaval and a sharply deteriorating macroeconomic outlook. With the US government mired in a prolonged shutdown and France roiled by new fiscal concerns, investors have flocked to gold, driving spot prices as high as $3,976 in recent trading sessions and putting the symbolic $4,000 target within reach. Currently, the SPDR Gold Shares ETF (GLD) closed at $364.38 and is up +48.73% over the last year.

Uncertainty, Central Banks, and Safe-Haven Demand

Much of gold’s rally this year has hinged on the disruptive cocktail of central bank buying, shifting monetary policy expectations, and growing doubts over the stability of sovereign assets traditionally seen as safe. The Federal Reserve’s monetary policy remains clouded by the shutdown, depriving investors—and policymakers themselves—of crucial data to gauge economic health, while consensus builds that rate cuts may occur before year’s end. These conditions have sent gold’s appeal soaring: As a non-yielding asset, gold thrives when real interest rates fall, and global buyers have responded by pouring record sums into gold-backed ETFs and physical bullion.

Central banks have emerged as powerful influencers in this rally, rebounding from a brief pause in July to add another 15 tonnes to reserves in August alone, according to the World Gold Council. Poland remains the year’s largest sovereign buyer, while demand has picked up from Kazakhstan, Bulgaria, and El Salvador, underscoring a structural shift in global reserve management away from the US dollar. Central banks now hold around 36,000 tonnes of gold, the highest proportion of reserves in three decades.

Analyst Projections and What Comes Next

Major banks have updated their forecasts in rapid succession as gold eyes further milestones. HSBC, Bank of America, and Goldman Sachs (GS) are collectively targeting prices in a trading range from $3,800 to $4,100 through yearend and into 2026, with forecasts stretching as high as $4,900 per ounce by December 2026 if current demand trends persist. J.P. Morgan (JPM) projects gold averaging $3,675 in Q4 2025 and approaching $4,000 in the first half of 2026, as central banks continue diversifying out of dollar reserves and ETF inflows remain strong.

Worries over inflation, the deteriorating US fiscal outlook, and persistent geopolitical instability have replaced long-standing faith in Treasuries as the ultimate safe haven, prompting central banks and institutional investors to reassess gold’s role in portfolio hedging. The bullish stance is reflected in survey and AI-driven forecasts: BullionVault users, for example, now project an average Q4 2025 price as high as $3,679, well above analyst forecasts from the LBMA and other institutional sources.

The Search for Safety—And Its Limits

The feverish demand has not been without consequence. Rapid price gains have prompted some tactical selling by smaller central banks and private holders, and the rally itself could eventually cool if political tensions or rate-cut bets abate. Yet for now, gold’s surge remains anchored in deep investor anxieties and structural changes in the reserve landscape, making new highs likely as uncertainty lingers.

The Sum…

If recent history is any guide, the precious metal may not stop at $4,000—a milestone that reflects more than just fear, but also a global recalibration of what it means to be “safe.”