Gold hits record above $3,500 as analysts warn it could climb to $5,000 amid concerns over Fed independence

Gold prices surged to fresh record highs this week as investors sought safe havens amid market turbulence linked to President Donald Trump’s public challenges to Federal Reserve independence.

The precious metal reached an intraday peak of about $3,567 an ounce, up more than 40% over the past year, and traded at roughly £2,609 in sterling terms. Market participants pointed to a roughly 9.4% fall in the dollar against a basket of major currencies and broad selling across stocks and bonds at the start of September as immediate drivers of the rally.

Analysts at Goldman Sachs said a scenario in which Fed independence is damaged could prompt higher inflation, lower prices for stocks and long-dated bonds, and an erosion of the dollar’s reserve currency status — a mix of outcomes that would likely push investors toward gold.

Goldman’s baseline forecast expects the price to reach $4,000 an ounce by the middle of next year. The firm added that a relatively modest reallocation — if 1% of the privately owned market in US bonds flowed into gold — would push the metal’s price to nearly $5,000 an ounce.

UBS separately said persistent uncertainty could take gold toward $4,000 next year. The remarks followed public tensions between the White House and the Fed: the President has publicly criticised central bank policy, publicly toyed with the idea of dismissing Fed Chair Jerome Powell and has taken steps aimed at removing Fed board member Lisa Cook, according to reporting and market commentary this week.

Those developments have sharpened investor concern over the central bank’s ability to set monetary policy without political interference. Market participants said such concerns can weaken confidence in the dollar and in government debt as a secure store of value, prompting flows into assets perceived as safer or as hedges against currency debasement.

Traders and asset managers also pointed to renewed focus on sovereign fiscal positions and geopolitical risk as amplifiers of the move into safe havens. The initial September sell-off hit both equities and long-dated bonds, pressuring asset prices across developed markets.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said that "warning lights are flashing about increasingly tricky economic conditions and geopolitical risk," a dynamic that has helped underpin demand for gold in recent sessions.

Gold’s rally has been accompanied by volatility in currency and bond markets. A weaker dollar typically raises the dollar price of gold for holders of other currencies, bolstering physical and ETF demand outside the United States. At the same time, rising inflation expectations and concerns about policy credibility can increase the metal’s appeal as an inflation hedge.

Market strategists cautioned that large moves by institutional investors would be needed to sustain extreme price targets, but they said the current environment of political uncertainty and cross-asset selling makes such flows more plausible. Portfolio reallocations away from sovereign debt into tangible assets such as gold would also be influenced by liquidity, regulatory constraints and risk appetites.

Traders will watch upcoming economic data, Federal Reserve communications and any further political developments for clues about how long the current risk-off environment will persist. For now, analysts at major banks say the combination of policy risk, currency weakness and heightened investor demand has set the stage for gold to test substantially higher levels than seen at the start of the year.