Gold surged to a record Tuesday, lifted by expectations of further U.S. Federal Reserve rate cuts and renewed flows into exchange-traded funds. Analysts say central bank buying and investor fear of missing out are also fuelling the rally.
Bart Melek, managing director and global head of commodity strategy at TD Securities, says China and other nations are steadily building reserves, underscoring a shift in global holdings. He also notes silver remains supported by tight supply and strong industrial demand.
Key Takeaways
- Gold hit US$3,748, up 41.7 per cent year-to-date, supported by Fed easing bets, ETF inflows and trader positioning.
- Inflation above three per cent and lower real yields strengthen gold’s long-term outlook despite potential short-term pullbacks.
- Central bank demand remains strong, with China’s reserves still far below U.S. and German levels.
- China may seek to hold other nations’ gold, highlighting geopolitical diversification away from Western custodians.
- Silver’s structural deficit is reinforced by demand from solar power, electric vehicles, 5G technology and higher ETF holdings.
Read the full transcript below:
ANDREW: Gold is the story of the day, reaching a new record high. There are expectations of additional interest rate cuts by the U.S. Federal Reserve. Meanwhile, silver prices have also been rising, and our guest says industry demand for silver is likely to remain strong. We’re joined now by Bart Melek, managing director and global head of commodity strategy at TD Securities. Bart, thanks very much for joining us. What’s your view on gold? Does it have momentum? Is US$4,000 gold a possibility?
BART: First of all, it’s wonderful to be here, and it’s a great time to be in the precious metals business. I am on record as saying that US$4,000 gold is a real possibility. The main reason is the Federal Reserve is continuing to loosen monetary policy as we move into 2026. We’re likely looking at one more cut this year, potentially two, even though the Fed chair didn’t give us complete confirmation today.
We are seeing renewed interest from ETF investors, with holdings up strongly from the February lows. Proprietary and discretionary traders, many of whom missed this rally, are likely to come in as well. The steepening yield curve is reducing the cost of carry, inflation is expected to move higher, and investors who are underinvested in gold are keen to reposition.
ANDREW: What do you mean by “carry”? You mean the money traders borrow to take a gold position?
BART: That’s correct. With short-term yields dropping, it’s cheaper to hold a gold position.
ANDREW: You also have some insight on central bank buying. We’ve heard a lot about China purchasing gold, but you argue that as a percentage of its total reserves, gold remains small compared with the United States or Germany.
BART: Exactly. Gold accounts for about 6.7 per cent of China’s reserves, while its foreign exchange reserves are about US$3.7 trillion. Even if China doubled that share to 15 per cent, it would still be far below America’s 72 per cent or Germany’s roughly 70 per cent. Russia holds a lot as well, and other countries such as Poland are adding reserves.
That means there are literally millions of ounces still to be purchased. These programs take decades, not just a year or two. If China tried to accelerate, prices could move toward US$6,000 to US$7,000 an ounce. But this will be a gradual, ongoing process.
ANDREW: Bloomberg has reported that China may offer to hold other countries’ gold reserves to boost its influence in the market. How would that work?
BART: China would act as custodian. At present, the primary custodian for central banks is the Bank of England, with gold stored securely under the Thames. But China is capitalizing on uncertainty in global relations. Some emerging-market officials worry that if they fall out with Western democracies, they might not be able to access gold stored in London.
There is no evidence that this has ever happened, but in today’s turbulent world, some countries may prefer to diversify and place holdings in China, particularly if they are aligned with Beijing.
ANDREW: That’s interesting. The world seems to be showing signs of splitting into two poles — China and Russia on one side, and the United States and Britain on the other. Bart, thank you very much.
BART: It’s good to speak with you. Thank you.
ANDREW: Bart Melek, managing director and global head of commodity strategy at TD Securities.
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This BNN Bloomberg summary and transcript of the Sept. 23, 2025 interview with Bart Melek are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
