(NEW YORK) — The price of gold topped $3,500 per ounce for the first time ever on Tuesday, reaching toward new record highs as trading stretched into midday.
Gold prices have soared 35% so far this year, far outpacing a 9% gain in the S&P 500. Over that period, the Dow Jones Industrial Average has jumped 6% and the tech-heavy Nasdaq has climbed 10%.
The rush toward gold reflects heightened economic uncertainty, experts said. The safe-haven asset offers investors a hedge against an uneasy financial environment as a sharp hiring slowdown coincides with a steady uptick of inflation, according to analysts. Stress in long-term bond markets and a devaluation of the U.S. dollar have unsettled alternative assets typically viewed as low-risk investments, they added.
“The probability of an economic slowdown has greatly increased and people naturally look for a safe haven asset,” Campbell Harvey, a professor at Duke’s Fuqua School of Business who studies gold prices, told ABC News.
However, gold prices carry volatility of their own, especially when buyers enter the market at a high point, risking losses instead of a security blanket.
The run-up in gold prices comes after a steep drop-off in monthly hiring and a gradual rise in inflation.
The U.S. added an average of about 35,000 jobs over three months ending in July, which marked a major cooldown from roughly 196,000 jobs added on average over the previous three-month period, U.S. Bureau of Labor Statistics data showed.
Meanwhile, a measure of underlying inflation stands at its highest level since February, in part due to tariff-induced price increases.
Investors widely expect the Federal Reserve to cut interest rates this month in an effort to counteract the labor market slowdown. Markets peg the chances of a quarter-point interest rate cut at 91%, according to CME FedWatch Tool, a measure of investor sentiment.
The expectation of an interest rate cut establishes financial conditions marked by low interest rates for short-term U.S. bonds alongside persistently elevated interest rates for long-term bonds, since many investors fear a return of inflation amid ongoing tariffs, Aakash Doshi, head of gold strategy at State Street Investment Management, told ABC News.
Those dynamics reflect a favorable environment for gold, Doshi added. On the one hand, a near-term interest rate cut would reduce competition from short-term U.S. bonds, since the interest payments on such products will fall.
Meanwhile, elevated interest rates for long-term bonds reflect flagging demand for such investments as inflation fears mount and President Donald Trump pressures the Fed to dramatically lower interest rates. By comparison, gold appears a relatively safe long-term investment.
“The Fed is cutting because of a weak labor market but inflation is still elevated. That supports alternative fiat assets like gold,” Doshi told ABC News.
The flight away from some long-term bonds has coincided with a depreciation in the value of the U.S. dollar. Its value against other currencies plunged about 11% over the first half of 2025, the biggest decline in more than 50 years, a Morgan Stanley report last month found.
The decline in the U.S. dollar’s value reflects a shift away from global dependence on the dollar as a global reserve currency, Harvey said. As a replacement for the dollar, some investors have sought out gold, boosting the asset’s price, he added.
“Countries and institutions are diversifying their portfolios, which are heavily weighted to U.S. dollar assets. They’re adding something else – and that something else is in part gold,” Harvey said.
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