gold prices: Gold prices are skyrocketing, and that could spell trouble for the US economy
In the last few weeks, gold prices have risen by nearly 20% since mid-August, much faster than the US stock market. The rise comes at the same time as reports emerged showing the job market is slowing, which many analysts see as a warning of a possible recession, according to ABC News.
As the dollar falls, investors turn to gold
The recent government shutdown has added further risks to the US economy. Some important data reports that could have helped calm people’s fears have been halted due to the shutdown.
Analysts said the reason investors buy gold is because it acts as a “safety” when the economy is risky. Long-term bond markets are facing stress and the US dollar is losing value; many investors put their money in gold instead.
Paolo Pasquariello, a finance professor at the University of Michigan, told ABC News: “There’s no way you can interpret these exploding gold prices as a good sign; they’re a warning sign.” He added that these high gold prices are probably a sign of bad times ahead for the US economy.
The latest jobs report showed a sharp decline in hiring in August, continuing the weak trend. Later updates showed the U.S. added fewer jobs in 2024 and early 2025 than previously predicted, raising doubts about the strength of the job market. Analysts noted the uncertainty resulting from the Russia-Ukraine war and the growing political divide in the U.S. Billionaire Ray Dalio, founder of Bridgewater Associates, told Bloomberg that there might even be “some kind of civil war” in the United States. He advised investors to buy gold to protect against market chaos.
Fed’s interest rate cut may further increase gold prices
Investors also expect the Fed to cut interest rates later this month to help the slowing job market. If this happens, this will be the second interest rate cut in a row.
Low interest rates are good for gold because they make it more valuable compared to things that pay less interest, like savings accounts or bonds. “It could benefit gold if the Fed continues its rate-cutting cycle,” Aakash Doshi, head of gold strategy at State Street Investment Management, told ABC News.
The US dollar also lost a lot of value. Compared to other currencies, its value fell nearly 11% in the first half of 2025, according to a Morgan Stanley report; This is the biggest decline in more than 50 years.
Experts said this autumn showed that investors around the world are gradually moving away from the US dollar, the main global currency. They are concerned about changes in US policies and Trump’s pressure on the Federal Reserve.
“Investors are starting to get nervous about traditionally safe US assets like treasuries. Where else will they put money? Gold,” Paolo Pasquariello said. This means that people do not even trust safe US investments right now, so they prefer gold.
But some experts have warned that gold is not always safe. Prices may fall suddenly after rising this much. “Gold and silver are currently in a boom cycle, but you can bet they’ll enter a bust period sooner than investors expect,” Jim Wyckoff, senior market analyst at Kitco Metals, told ABC News.
But for now, economic weakness, a falling dollar and political problems are causing people to rush to buy gold. “It is spreading into safe-haven demand for gold,” Wyckoff said.
FAQ
Q1. Why are gold prices rising so fast in 2025?
Gold prices are rising because investors are concerned about the US economy, weak job growth, falling dollar value and global political tensions.
As a Trustworthy and Trustworthy News SourceQ2. Is the rise in gold prices a bad sign for the US economy?
Yes, experts say rising gold prices generally indicate economic distress, which means investors are losing confidence in the market and turning to gold for safety.
