- On 2 September gold passed 3,500 dollars an ounce for the first time.
- It was driven by central bank purchases, doubts about the Fed and trade uncertainty.
- Its role in a portfolio is to protect, not multiply: its weight should be decided with judgement and not by the headline.
On 2 September 2025, gold passed 3,500 dollars an ounce for the first time. The rise rested on central bank purchases, doubts about the Federal Reserve and trade uncertainty. Record highs in the precious metal tend to generate headlines and curiosity, and also questions about whether it is a good time to get in or out. This note does not answer those questions, but it does help to put the phenomenon in context.
Gold is a particular asset: it generates no interest or dividends, does not depend on anyone’s solvency and has a long history as a store of value. Its price reflects, above all, demand for protection against uncertainty, and that is why it tends to rise when there are doubts about currencies, central banks or the geopolitical situation, as there were in those months. That logic explains why the metal tends to rise at moments of tension and why it can also correct when calm returns.
What pushed the price
Three factors came together: central bank purchases, which strengthened their reserves, together with doubts about the Fed and trade tension. Together they pushed the price to a level never seen before.
When central banks buy gold, they do so to diversify their reserves and reduce their dependence on other currencies. It is stable demand that is not very sensitive to price, and it supports the market. Added to it were investors seeking refuge from doubts about US monetary policy and world trade, which reinforced the trend. A trend reinforced by several factors at once is sturdier, but also more vulnerable if one of them suddenly changes.
A two-year rise
Gold had risen strongly over two years. Rapid rises tend to attract new buyers drawn by the headline, and that can increase volatility, so a record high does not guarantee that the price will keep rising or that it will not correct.
The history of gold includes periods of big rises followed by long falls. That does not imply it will repeat, but it serves as a reminder that no asset rises in a straight line. Anyone considering holding gold in their portfolio would do well to think long term and not to feel compelled by fear of missing a rise. Patience and a plan written in advance are better advisers than haste.
What it is for in a portfolio
Its role in a portfolio is not to multiply but to protect: its weight should be decided with judgement, not by the headline of the day. That decision depends on the horizon, liquidity needs and the rest of the assets, and is a conversation to have with an adviser, without haste and away from moments of euphoria. A conversation like that can also clarify what percentage of one’s wealth goes to protection and what to growth.
A well-thought-out portfolio has components with different functions: some seek growth, others income, others liquidity and others protection. Gold sits in the last category. Knowing what function each part serves helps one not to ask of any asset what it cannot give, and to stay calm when one of them moves against you. Reviewing the portfolio once or twice a year is generally enough to check that each piece still serves its function.
Gold protects best when decided calmly, not when it is on the front page.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
