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Gold prices in August 2025 experienced sharp fluctuations before closing the month stronger. The main reasons for this included U.S. payrolls data, Federal Reserve commentary and geopolitical risks. Gold reaffirmed its role as a safe-haven asset, ending the month above USD 3,447 per ounce.
Gold performance in Aug’25
Gold began the month at USD 3,296.40 per ounce. The weaker U.S. payroll data and the manufacturing sector boosted expectations of a Federal Reserve rate cut. Momentum continued as weaker Eurozone and U.S. durable goods data pushed treasury yields lower. However, mid-month saw a correction after the U.S. clarified that gold would not face reciprocal tariffs.
In the third week, cautious Federal Open Market Committee (FOMC) minutes and geopolitical news pressured gold further. However, Fed Chair Powell’s remarks at the Jackson Hole symposium suggesting reduced resistance to a September rate cut, reignited buying interest. The metal finally closed at USD 3,447.95 per ounce at month-end.
ExGold reclaims true safe asset status
Gold’s movements are closely tracked to the U.S. Inflation-Protected Securities (TIPS) and Exchange Traded Fund (ETF) flows. Correlations with TIPS strengthened and an increase in ETF holdings provided investors with easy exposure without physical storage. Recently, however, these correlations have weakened.
Central banks have become a major source of demand, especially, China, Iran and Venezuela. The Reserve Bank of India has also steadily increased gold reserves as part of currency diversification. Gold has reasserted itself as a neutral safe-haven asset, less tied to financial engineering and more to global stability.
Historical echoes from 1930 and 1970
Throughout history, gold has performed well during times of economic and fiscal dominance and mercantilism. If we look back to the 1930s, when the U.S. Smoot-Hawley tariff act drove prices higher, or in the 1970s, when an unsustainable situation in terms of global BOP vs Bretton-Woods allowed another major rally, similar conditions echo today.
Today’s fiscal dominance creates comparable pressures. This backdrop supports higher gold prices in the near term. However, if the world transitions to a new rules-based financial system, gold could see a moderation in value.
Outlook and risks
Fiscal dominance, where interest rates are held lower than inflation for political or budgetary reasons, could continue to remain an important driver for gold prices and make this metal an attractive source of investment. On the downside, stabilisation of the U.S. economy, easing political risks, or the creation of a new global financial framework could cap prices.
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