Gold’s Marathon: Inches Gained, But the Finish Line Eludes
Saturday, September 27th 2025
The precious metals market has once again proven that it’s a game of near-misses and endurance. For the fourth time, gold made an ambitious charge toward the elusive $3,400 mark, only to fall short once again—tripping just as the tape came into view.
Silver, too, flirted with history. For the first time in 14 years, the $40 level was within reach, but the momentum wasn’t strong enough to sustain the climb.
This recurring pattern of almost there but not quite has become all too familiar for seasoned investors in gold and silver. And while the dips and rallies might frustrate traders, they reflect a market that is deeply sentiment-driven—especially in the case of gold, where investor psychology plays a far greater role than supply-and-demand fundamentals.
Trade Talks Disrupt the Rally—Again
The latest trigger for the pullback? News of a potential breakthrough in U.S.–Japan trade negotiations. According to reports, the Trump administration is nearing a deal that would impose 15% tariffs on Japanese imports. This development raised hopes for a similar deal with the European Union, injecting a dose of optimism that dulled safe-haven demand.
Even President Trump added fuel to the speculation, suggesting a “50/50” chance of reaching a trade deal with Europe. But for gold, clarity and optimism in trade are momentum killers. It is the fog of uncertainty—particularly surrounding the prolonged trade war—that has been the driving force behind gold’s recent rallies.
The Paradox of Price and Demand
Ironically, gold’s own strength may be limiting its growth. As analysts often say, “higher prices cure higher prices.” Case in point: the China Gold Association recently reported a 3.54% decline in physical gold consumption in the first half of the year, largely due to rising prices. Jewelry purchases in particular took a hit.
However, investment demand tells a different story. The World Gold Council highlighted that Chinese gold ETFs gained $8.8 billion in value during the same period. Investors remain committed—even if consumers are pulling back.
Analysts See Two Paths—And Gold Wins Either Way
There is a growing consensus among commodity analysts: physical demand may soften, but economic uncertainty will keep investment demand alive. With recession fears simmering and inflation concerns brewing, many believe that gold could still climb to new record highs before the year ends.
And it’s not just about trade policy. The economic consequences of tariffs are beginning to show. General Motors reported a 35% drop in profits in Q2, attributing the decline to rising input costs from Trump’s tariff strategy. Corporations now face a dilemma: absorb these costs and hurt earnings or pass them on to consumers.
Either outcome threatens to drag down growth while pushing prices higher—a classic recipe for stagflation. In such an environment, gold becomes a natural refuge.
Falling Real Yields Could Be Gold’s Best Ally
With the Federal Reserve facing pressure to ease monetary policy and inflationary risks mounting, U.S. real yields are expected to decline further. This weakens the appeal of government bonds and enhances gold’s relative value.
Unlike interest-bearing assets, gold doesn’t offer a yield—but when real yields fall, that weakness becomes a strength. In a low-yield environment, gold is not only a hedge against inflation, but also a strategic portfolio diversifier, offering protection with minimal opportunity cost.
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