Gold Surges to Record High Amid Stagflation Fears and Rate Cut Speculation

Gold (XAUUSD) has surged 39% year-to-date, eclipsing its performance during both the COVID-19 pandemic and the Great Recession. The precious metal hit a fresh all-time high of $3,724.90 per troy ounce on Monday, fueled by mounting economic uncertainties.

Tariffs, geopolitical tensions, and a fragile labor market have driven demand for the safe-haven asset. Inflation remains stubbornly above the Fed’s 2% target, with August’s CPI registering 2.9% annual growth. "The risk of stagflation has increased," warns State Street’s Aakash Doshi. "That’s a perfect environment for gold."

Lower interest rates could further bolster gold’s appeal. Unlike government bonds, bullion doesn’t yield interest, making it more attractive as opportunity costs decline. The specter of stagflation—a toxic mix of high inflation, unemployment, and sluggish growth—looms large over markets.