Gold hits record 39th new all-time high in 2025: Is it still a good hedge?

Gold hit its 39th record high of 2025, closing September at US$3,825/oz, up 12% for the month and 47% year-to-date - its best annual return since 1979, according to the World Gold Council.

Gold extended its record-breaking run in September, hitting its 39th new all-time high of 2025 as investors flocked to safe-haven assets amid global political uncertainty and a weaker US dollar. The metal ended the month at US$3,825 per ounce, up 12% month-on-month and 47% year-to-date — its strongest annual gain since 1979, according to data from the World Gold Council (WGC) and Bloomberg.

 

Record monthly exchange-traded fund (ETF) inflows of US$17.3 billion (146 tonnes) were the main driver of September’s rally, led by North America ($10.6 billion) and Europe (US$4.4 billion), while Asia added US$2.1 billion. Managed money net longs on COMEX rose by US$9 billion (+33 tonnes), amplifying upward momentum in the gold market.

 

Drivers Behind the Rally

 

The Gold Return Attribution Model (GRAM) by the WGC attributes September’s gains to a mix of political tension, US dollar weakness, and investment demand. These factors outweighed mild drag from profit-taking and portfolio rebalancing late in the month.

 

Across major currencies, gold notched double-digit gains, including 13% in Canadian dollars, 12.5% in Indian rupees, and 12.8% in Turkish lira. India’s benchmark MCX gold price climbed to ₹1,14,761 per 10g, marking its highest level on record. 

Gold reached 13 new all-time highs in September and the momentum rolls into October

 

As of 30 September 2025. Based on the LBMA Gold Price PM in USD, expressed in local currencies, except for India and China where the MCX Gold Price PM and Shanghai Gold Benchmark PM are used, respectively.

   

Is There More Upside?

 

While gold’s performance has been stellar, analysts caution that the metal may be tactically overbought, leaving limited room for immediate gains. The WGC notes that long-run positioning remains light, but from a short-term perspective, marginal investment buyers may hesitate at current valuations.

 

At the same time, risks in equity markets — historically volatile in October — and an oversold US dollar could create the next catalyst for gold’s movement. “The only real variable that seems to matter during equity sell-offs is where the US dollar goes,” the WGC report said, adding that a stable or weaker dollar typically benefits gold.

 

Equities on edge, again

October is known for large equity sell offs, and risks are riding quite high

Gold is generally a good hedge, but there may be concerns about its ability to respond given how stretched it looks

In addition, a very oversold US dollar continues to pose a threat to gold, should a squeeze materialise

 

"However, our analysis suggests that these concerns are not warranted and that, absent a liquidity crunch, gold’s hedging credentials remain intact. September is, on average, the worst calendar month for US stocks and October is known for big corrections, making this a generally nervous time for equity investors.

 

The likely threat to equities is acute, given lofty valuations, goldilocks earnings projections, high market concentration, extended positioning, and technical red flags. Gold is a great long-run diversifier and a good short-run hedge against equity drawdowns. But because gold is not a contractual hedge, the good performance during equity corrections isn’t guaranteed," said the report. 

 

 Safe-Haven Demand Still Intact

 

Despite concerns about overbought conditions, analysts say gold’s hedging power remains strong, especially as global markets face a mix of risks:

 

Geopolitical flashpoints, including renewed US-China trade friction.

 

US fiscal uncertainty, with a government shutdown earlier this month.

 

Lingering inflation fears and soft employment data in key economies.

 

Both central banks and private investors have been “buying the dips,” according to the WGC. Even a brief intraday selloff on September 30 was quickly reversed, showing robust underlying demand.

 

“There are plenty of reasons for investors to look at gold,” the report noted. “Absent a major liquidity crunch, gold’s credentials as a hedge against equity drawdowns remain intact.”

 

Outlook: Momentum Likely to Hold

 

While a near-term correction can’t be ruled out, the structural backdrop for gold remains favorable. Central banks continue to diversify reserves, ETFs show record investor participation, and declining real yields have improved gold’s relative appeal versus bonds.

 

If equity markets correct in the coming months — historically common in October — analysts expect gold to “hold its ground or edge higher,” particularly if the dollar fails to rebound.

 

Key points:

There are plenty of reasons for investors to be looking at gold, according to World Gold Council.

 

 Among these are:

• US government frictions, including the shutdown in early October
• Trade tensions not abating
• Flailing employment as inflation fears linger
• Dollar-hedging applying continuous pressure on one of gold’s key drivers.

 

"While our analysis is only indicative, it leaves us confident that gold will hold its ground and perhaps see further uplift should equities experience a correction, given the plethora of supportive factors elsewhere. Perhaps only a major liquidity squeeze could upend both gold and equities, but there are no clear signs of fractures in credit or banking sectors…yet," said the WGC report.