To The Moon

$SPDR Gold Shares(GLD)$

Spot gold surged once again on Monday, September 22, breaking decisively above its previous all-time high and touching $3,759 per ounce. This new record, coming so soon after the Federal Reserve’s policy pivot, marks another defining moment for the yellow metal. Investors are now faced with a critical decision: is it time to lock in profits after a parabolic run, or is gold setting the stage for an even bigger breakout toward $4,000 and beyond?

The Golden Rally: How We Got Here

Gold’s climb to $3,759 has been anything but accidental. A convergence of macroeconomic, financial, and geopolitical forces has driven the rally to record territory.

1. Federal Reserve Policy Shift The Fed’s aggressive tightening cycle of 2022–2023 pushed real yields higher and temporarily capped gold’s momentum. But by mid-2025, the landscape shifted dramatically. Rate cuts—both delivered and telegraphed—lowered the opportunity cost of holding gold. Markets now anticipate that by 2026, the Fed funds rate could be near or even below 3%. Historically, falling real yields have been one of the most reliable catalysts for sustained gold rallies.

2. Fiscal Deficits and U.S. Debt Concerns The U.S. fiscal trajectory remains a structural tailwind for gold. With debt-to-GDP ratios exceeding 120% and annual deficits projected north of $2 trillion, questions around long-term fiscal sustainability persist. Foreign central banks, wary of U.S. debt dynamics, have accelerated gold accumulation as a diversification hedge against dollar exposure.

3. Persistent Inflation Pressures Headline inflation has cooled from its 2022 peaks, but core inflation remains sticky, particularly in wages and services. Investors continue to see gold as a hedge against the erosion of purchasing power—even in a disinflationary environment where inflation expectations remain volatile.

4. Geopolitical Instability Escalating conflicts in Eastern Europe, rising tensions in the South China Sea, and renewed trade disputes have amplified risk-off sentiment. Gold, as the ultimate “fear hedge,” has directly benefited from safe-haven flows.

5. Central Bank Buying Perhaps the most overlooked driver has been the unprecedented demand from central banks, especially in emerging markets like China, India, and Turkey. According to the World Gold Council, central banks have been net buyers for over a decade, but 2023–2025 has seen record accumulation as reserves shift away from the dollar.

Historical Perspective: This Time Different?

When gold sets new records, the obvious question arises: are we in a speculative bubble, or is this just the start of a larger secular trend? Looking back at history provides useful lessons.

• 1970s Supercycle – During the stagflation decade, gold skyrocketed from $35 to $850 per ounce, a more than 20x move. The driver was runaway inflation, oil shocks, and a collapse of confidence in fiat currencies.

• 2011 Peak – In the aftermath of the Global Financial Crisis, gold surged to $1,920 as central banks unleashed unprecedented quantitative easing. That peak coincided with Europe’s sovereign debt crisis and a weak dollar.

• 2020 Pandemic High – Gold hit $2,075 during the Covid shock, as investors scrambled for hedges against deflationary collapse and unprecedented monetary expansion.

What makes 2025 unique is the combination of both inflationary and deflationary risks—alongside fiscal instability and geopolitics. This hybrid risk environment makes gold’s role even more compelling compared to prior cycles.

Traders vs. Long-Term Holders: The Current Dilemma

The Case for Locking In Profits

• Technical Overextension – Gold is trading well above its 200-day moving average, suggesting potential for a short-term correction.

• Dollar Rebound Risk – A temporary strengthening of the U.S. dollar, especially if economic data surprises to the upside, could weigh on gold prices.

• Profit-Taking Psychology – At round numbers like $3,800, traders often trim exposure, sparking volatility.

The Case for Holding Long-Term

• Secular Bull Market – The macro backdrop remains supportive: falling real yields, fiscal uncertainty, and geopolitical fragmentation.

• Central Bank Flows – Long-term institutional demand, unlike speculative flows, tends to be sticky and less sensitive to short-term volatility.

• Portfolio Diversification – Gold’s correlation with equities remains negative during risk-off shocks, making it a strategic hedge.

For traders, the risk/reward favors trimming positions. But for long-term allocators, the structural case for gold remains intact.

Will Gold Outperform Other Assets in 2025?

So far, 2025 has been gold’s year:

• Equities – The S&P 500 trades near all-time highs, but gains are narrow, dominated by a few mega-cap tech names. Breadth has weakened, suggesting fragility. Gold, by contrast, has provided broad-based returns across portfolios.

• Bonds – U.S. Treasuries have staged a recovery, but real yields remain volatile. Gold offers a more reliable hedge against both inflation and credit risks.

• Crypto – Bitcoin has enjoyed bursts of speculative momentum but remains far more volatile. Institutional allocators continue to prefer gold as a tested hedge.

Unless a powerful equity rally resumes across all sectors, gold appears poised to outperform the majority of risk assets this year.

Technical Roadmap: Key Levels to Watch

• Immediate Resistance: $3,800 A psychological barrier, with many traders eyeing it as a short-term profit-taking zone.

• Extension Targets: $3,850–$3,870 Based on Fibonacci extensions and prior consolidation patterns.

• Major Milestone: $4,000 A historic level that could spark both institutional inflows and significant volatility.

On the downside:

• First Support: $3,500 A critical level that has acted as a pivot in recent months.

• Deeper Pullback Zone: $3,400 A potential accumulation area for long-term investors if volatility triggers sharp corrections.

The $4,000 Question

Hitting $4,000 per ounce would be more than symbolic—it would signal gold’s transition from cyclical rally to secular bull market. At that level, mainstream portfolio managers (who currently allocate just 1–2% to gold) may be forced to increase allocations, further fueling demand.

Portfolio Strategy: How Should Investors Position?

1. Active Traders – Consider partial profit-taking near $3,800 and look to re-enter on pullbacks toward $3,500–$3,400.

2. Long-Term Allocators – Maintain core positions. The structural tailwinds of deficits, Fed easing, and geopolitical risks argue for sustained exposure.

3. Diversifiers – Blend gold with other hedges such as long-dated Treasuries and defensive equities to balance risk.

4. Speculators – Gold miners and ETFs (GDX, GDXJ) may offer leveraged upside if gold sustains momentum, though they carry equity-like risks.

Final Verdict: Hold Core, Trade Around the Edges

Gold’s record-breaking surge to $3,759 per ounce highlights the strength of this cycle. Traders may be wise to take chips off the table near resistance levels, but long-term investors should not ignore the favorable macro backdrop.

Key Investor Takeaways:

1. Gold is benefitting from Fed easing expectations, fiscal deficits, and geopolitical instability.

2. Traders face heightened volatility risk at current levels, but long-term holders still have a strong structural case.

3. Technical roadmap points to $3,800 and possibly $4,000, with support at $3,500–$3,400.

4. Gold is on track to outperform bonds and potentially rival equities in 2025 performance.

5. Portfolio positioning should balance opportunistic trading with maintaining a strategic hedge allocation.

The real question for investors is not whether gold has peaked at $3,759—it’s whether this rally represents the final leg of a cycle or the opening chapter of a new secular bull market that could define the next decade.