Gold tops inflation-adjusted peak set in 1980 amid economic turmoil

NEW YORK: Amid ongoing economic and political uncertainty exacerbated by the Trump tariffs, gold surpassed its inflation-adjusted peak set in 1980, Bloomberg and others reported on Thursday, with the per ounce gold price hovering over $3,675.

Earlier in the day, the gold prices hit a high of $3,687.50 per ounce.

The latest gold rush is a product of reports that the Federal Reserve may opt for US rate cut next week to boost economy amid a possible slowdown, thus meeting a key demand of President Donald Trump.

It is despite the fact that the Trump tariffs have increased the risk of even higher inflation, but the threat of economic slowdown is expected to influence the decision in favour of US rate cut.

Hence, experts are optimistic about the rate cut despite the latest US inflation figures.

Read more: US inflation up, Turkiye goes for rate cut, EU holds

WHY THE GOLD RUSH?

Lower interest rates increase the appeal of non-yielding assets like gold and weaken dollar — the currency that helps the US maintain its economic and thus political hegemony.

However, the persistent inflation meant that investors have already been opting for safe-haven gold to avoid the risks associated with currency devaluation since the outbreak of COVID pandemic and the Ukraine war.

Gold prices have surged 40 per cent this year. During the process, more than 30 nominal records were shattered. The first 11 days of September so far has seen a 5 per cent jump.

Interestingly, it was the US economy which pushed the gold to the new inflation-adjusted high both in 1980 and now in 2025.

The only difference is that it was a Democrat Jimmy Carter in 1980 and Republican Donald Trump in 2025.

However, the combination is the same: high inflation, economic slowdown and geopolitical tensions with the Middle East being a constant, albeit we have an addition of war on mainland Europe.

But the trade war in the shape of Trump tariffs is certainly complicating the affairs for years to come. Some say this policy is irreversible given the competition between the US and China.

It’s a developing story. Details to follow