UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'A gilded age'
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Sep 2, 2025 Gold prices soar to record highs, fueled by central banks ramping up their reserves. The future of US interest rates looms large, affecting market strategies and inflation trends. As corporate investments shift amidst policy uncertainties, the interplay of these factors creates a dynamic economic landscape. Central banks are seeking alternative assets outside of US Treasury control, shaping the gold market in fascinating ways.
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Central Banks Drive Gold Rally
- Global gold prices reached a new record above $3,500 per ounce driven by central bank buying.
- Central banks hold gold as a dollar-reserve alternative not controlled by the US Treasury.
Gold As A Dollar-Adjacent Reserve
- Central banks switching to gold still retain a dollar reserve asset but one outside US Treasury control.
- This makes gold a strategic reserve diversification rather than abandoning dollar exposure.
Rate-Cut Expectations Support Gold
- Expectations of US Fed rate cuts lower the opportunity cost of holding non-yielding gold.
- Lower short-term yields have supported gold's attractiveness recently.