Gold FOMO could push metal to $4,000

Gold has surged to an all-time high of $3,880.8 per ounce, marking its seventh consecutive week of gains and a 47% yearly advance, driven by government shutdown uncertainty, a weakening U.S. dollar, and anticipated Federal Reserve rate cuts in October and December. State Street's Aakash Doshi projects a 75% probability of gold breaching $4,000 by Q4 or early 2026, citing a 'FOMO environment' and reduced opportunity cost for the non-yielding asset as rates decline. Global gold ETF inflows are at their highest since 2020, with physical holdings still below pandemic peaks, suggesting further buying potential and tightening supply/demand balances.

Analysis

Gold FOMO could push metal to $4,000 Gold ETF inflows hit best levels since 2020 Gold’s grind upward is showing no signs of slowing, with some eyeing another record milestone for the precious metal. "US $4,000/oz+ is likely a question of ‘when’ not ‘if’ in the current FOMO environment. We think there is a 75% probability that bullion markets breach US$4,000+ in 4Q or by early 2026," wrote Aakash Doshi, head of gold strategy for State Street Investment Management, in a note to clients. Gold wrapped its seventh week of gains, hitting an all-time high of $3,880.8 an ounce, bringing its yearly advance to over 47%. Uncertainty over the government shutdown, a weaker U.S. dollar and more interest rate cuts are seen as ongoing drivers. The Federal Reserve is expected to cut rates in October and December, according to the CME's FedWatch Tool. "As the Fed resumes its rate cutting cycle, gold could be supported through two key channels: (1) Reduced opportunity cost of holding gold as a non-yielding asset; and (2) Further potential bull steepening in the US Treasury curve, which should on balance be a US$ negative phenomenon," he added. The greenback is down against most of America's key trading partners and staring down the worst annual drop since the 1970s, he said. FED CUTS RATES FOR FIRST TIME IN 2025 Gold exchange-traded funds inflows this year globally are the best since 2020, Doshi noted. He also points out total physical holdings remain below the pandemic peak, "suggesting scope for further buying. Bullion ETF inflows can materially tighten gold supply/demand balances and are a primary factor driving record prices this year," he said. US TREASURY PLANS TO MINT TRUMP COINS SPDR Gold Trust ETF .State Street’s SPDR Gold Trust is the largest ETF backed by physical gold and has seen weekly inflows from Sept. 15 through month-end, according to ETF.com. WEALTHY INVESTORS TAP ETFS FOR THREE HOT ASSETS | Ticker | Security | Last | Change | Change % | |---|---|---|---|---| | DGP | POWERSHARES DB GOLD DOUBLE LONG ETN | 133.93 | +1.63 | +1.23% | | UGL | PROSHARES ULTRA GOLD | 46.64 | +0.77 | +1.68% | | PHYS | SPROTT PHYSICAL GOLD TRUST | 29.86 | +0.24 | +0.81% | | FGDL | FRANKLIN TEMPLETON HOLDINGS TRUST RESPONSIBLY SOURCD GOLD ETF | 52.02 | +0.44 | +0.85% | Other top performers include ProShares Ultra Gold and DB Gold Double Long Exchange Traded Notes. Both have advanced more than 90% this year, while Sprott Physical Gold Trust and Franklin Responsibly Sourced Gold ETF are up 47%, as tracked by VettaFi. Gold has reached a new all-time high of $3,880.8 per ounce, culminating a seven-week winning streak and delivering a year-to-date advance of over 47%. The rally is supported by a confluence of macroeconomic factors, primarily a weakening U.S. dollar, which is reportedly facing its most significant annual decline since the 1970s, and market anticipation of monetary easing. According to the CME FedWatch Tool, the Federal Reserve is expected to implement rate cuts in both October and December, a policy shift that enhances gold's appeal by reducing the opportunity cost of holding the non-yielding asset. Investor sentiment is exceptionally bullish, characterized by one analyst as a "FOMO environment," with State Street Investment Management assigning a 75% probability of bullion prices breaching $4,000 by the fourth quarter or early 2026. This sentiment is substantiated by strong capital flows; global gold ETF inflows are at their highest level since 2020. Notably, total physical holdings remain below the pandemic peak, suggesting further capacity for accumulation, which could continue to tighten the market's supply-demand balance and fuel price appreciation. The performance of gold-related ETFs confirms this trend, with leveraged products like UGL and DGP advancing over 90% this year, while physically-backed trusts such as GLD and PHYS have tracked the spot price's 47% gain.

Key Decisions for Investors

• Given the strong momentum driven by expected Fed rate cuts and a weakening dollar, investors could consider maintaining or adding to strategic long positions in gold and gold-backed ETFs like GLD or PHYS.
• For those with a higher risk appetite, leveraged instruments like UGL and DGP offer amplified exposure to gold's upside, though their inherent volatility requires diligent risk management.
• The sustainability of this rally is highly dependent on the Federal Reserve's forthcoming monetary policy decisions and the trajectory of the U.S. dollar; these should be monitored as primary signals for adjusting positions.
• Investors should track gold ETF flow data, as continued strong inflows would serve as confirmation of robust institutional and retail demand, supporting the case for further price gains.