What drives gold’s 48% surge in just nine months?

With a 12% rise in September alone - the highest in decades - the gold market saw strong profit-taking activity, which only slightly slowed the momentum. By the end of October 3 trading, prices held below USD 3,900 per ounce without significant pullback.

Gold spot prices have climbed more than 48% from USD 2,625 per ounce at the start of 2025, marking the sharpest annual increase since 1979.

Most factors supporting the rally remain intact: a weakening U.S. dollar, expectations that the Federal Reserve may cut interest rates twice more in 2025, ongoing geopolitical tensions in Ukraine, the Middle East, and Europe, and continued global monetary easing.

Now, another catalyst has emerged - the U.S. government shutdown.

Last night, the U.S. Senate again failed to pass competing spending bills to end the three-day government closure.

While the impasse has not yet deeply impacted the economy, prolonged gridlock could prove costly. Early estimates suggest the U.S. could lose USD 7–15 billion per week of shutdown.

In September, JPMorgan noted an unprecedented global shift from the U.S. dollar into gold, calling it the “de-dollarization trade.” Many retail investors are losing faith in the greenback amid fears of long-term inflation and mounting government debt.

Over the past three years, central banks have fueled this shift by diversifying away from the dollar into gold.

According to JPMorgan, the latest rally entered a new stage as retail investors joined in, with gold ETF inflows hitting record highs last month.

Aakash Doshi, Head of Commodities Strategy at State Street Global Advisors, said SPDR Gold Shares (NYSE: GLD) - the world’s largest gold ETF - increased its holdings by 35.2 tons in September, including a record 18.9 tons added on September 19, the largest single-day inflow ever.

However, total global ETF gold holdings still remain below their 2020 peak.

Data from Heraeus Precious Metals show that China and India continued heavy gold imports despite rising prices. In August alone, China imported 100 tons for trade, investment, and industrial use.

According to the World Gold Council (WGC), the People’s Bank of China added 2 tons to its reserves in August, bringing total holdings above 2,300 tons, or 7% of its total assets.

The WGC’s October 3 report showed several central banks ramping up purchases in August: Kazakhstan (8 tons), Bulgaria (2 tons), Turkey (2 tons), Uzbekistan (2 tons), Ghana (2 tons), and El Salvador. Conversely, Russia sold 3 tons and Indonesia 2 tons. In total, central banks globally made net purchases of 15 tons that month.

Gold heading toward USD 4,000 per ounce

A Kitco survey found that major Wall Street investors overwhelmingly expect gold to break USD 4,000 soon, while Main Street retail investors are even more optimistic amid the ongoing U.S. government shutdown.

Marc Chandler, CEO of Bannockburn Global Forex, said the shutdown, speculation over Europe potentially repurposing Russia’s gold reserves, and continued geopolitical conflicts are strengthening market sentiment after seven consecutive weeks of gains. “USD 4,000 per ounce is no longer far away,” he noted.

According to Kitco, 92% of Wall Street analysts forecast higher gold prices for the week of October 6–10, with none expecting a decline. On Main Street, 74% of retail investors predicted gains, while only 18% foresaw drops.

Major banks including Deutsche Bank and Goldman Sachs expect gold to soon surpass USD 4,000, potentially even USD 5,000 per ounce.

Silver has also surged, nearing USD 48 per ounce - just USD 2 shy of its all-time high.

Domestically, Vietnamese gold prices remain near record highs. As of the morning of October 4, SJC listed 9999 gold bars at VND 136.6–138.6 million (USD 5,330–5,410) per tael, up nearly VND 1 million in a day.

By late afternoon on October 3, SJC’s gold rings were priced at VND 132.3–135 million (USD 5,160–5,260) per tael, up VND 800,000, while Doji’s gold rings reached VND 132.6–135.6 million (USD 5,170–5,280) per tael - both hitting historic highs.

On October 3, Vietnam’s Ministry of Finance announced it had submitted a proposal to impose personal income tax on gold bar trading to improve market transparency and curb speculation. The tax will not apply to raw gold or jewelry.

Manh Ha