Gus McCubbing and Luke Kinsella
Investors are banking on the record run in gold to continue, turbocharging the ASX-listed gold miners on expectations that further interest rate cuts from the US Federal Reserve will fuel the next leg of demand.
The precious metal has jumped 10 per cent over the past month and this week reset its record high at $US3759.23 an ounce after the Fed last week cut interest rates for the first time this year and indicated more to come. Commonwealth Bank tipped the price could hit $US4000 by the end of the year.
The rally in the yellow metal has taken the ASX-listed gold stocks with it as a higher commodity price boosts profitability of the miners. Australia’s largest listed gold miner, Newmont, has jumped 16 per cent over the past month, while competitors Northern Star Resources and Evolution Mining have rocketed 22 per cent.
“Investors are now grappling with a more dovish Fed, potentially weaker Fed independence, a weaker US dollar and the potential for growth and inflation to re-accelerate,” said Schroders’ head of fixed income Sebastian Mullins said
“After trading sideways for the last few months, gold broke out in late August, days after Donald Trump attempted to fire Fed governor Lisa Cook.”
When interest rates are lowered, it reduces the yields on bonds and saving accounts, which often fuels demand for non yield-bearing assets like gold.
Mullins cautioned that while a pullback from the recent rally was feasible, it would not undermine the bull market in gold.
“As long as investors remain concerned about a more dovish Fed, a more politicised Fed and continued geopolitical tensions, gold should remain well bid given historically low allocations within portfolios,” he said.
‘It’s going parabolic’
The price of gold has rocketed more than 40 per cent in 2025, riding a wave of safe haven demand and as investors, including central banks, diversify their assets away from the US dollar and Treasuries.
Wilson Asset Management portfolio strategist Damien Boey said that while the market usually looked to the bond market during times of uncertainty, a higher risk premium at the longer end of the yield curve meant that gold had become the “natural alternative”.
“You’re not finding that diversification between bonds and stocks any more. You need to go outside that universe,” he said. “What’s given the gold rally more life now is the fact that the Fed cut rates and bond yields went up.
“But my problem with buying gold right now is that it’s going parabolic. It requires certain conditions for that to be right, and we’re not sure that’s the case.”
Ten Cap’s Jun Bei Liu said that usually when the market rallies, investors sell gold to chase higher returns in riskier assets like equities, but this time it’s different.
“It almost seems like the market is using gold to hedge off for everything else. The market is strong, but there is investor worry about inflation, interest rates and geopolitical uncertainty,” Liu said.
“Gold has become a way to diversify or hedge against the potential tail risk of things that could go wrong.”
Liu said while predicting the gold price was difficult, her fund always had some sort of exposure to the yellow metal.
Commonwealth Bank’s commodities strategist Vivek Dhar said it was “unusual” for gold to outperform other safe-haven assets like the US dollar and Treasuries.
“The re-ordering of safe-haven demand assets means that gold likely benefits more from risk events today than it did prior to 2025.”
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