Gold Surpasses Inflation-Adjusted 1980 Record Amid Fed Cut Bets

Gold markets extended their historic rally this past week, with prices breaking through the inflation-adjusted record high set in 1980. Spot gold climbed to $3,600/oz, up nearly $150 week-on-week and 37% year-to-date, officially surpassing the inflation-adjusted equivalent of $3,590/oz from the January 1980 peak. The move reflects a deepening “debasement trade” as investors increasingly hedge against currency devaluation and long-term sovereign debt risks. 

The backdrop has been defined by weakening U.S. labor market data and rising expectations for a September Federal Reserve rate cut. Payrolls data showed just 22,000 jobs added versus 75,000 expected, cementing market conviction for at least a 25bp cut and raising speculation of a larger 50bp move. With the Fed now poised to join the global easing cycle, investors are rotating out of fixed income into gold, underscoring its appeal as a hedge amid shrinking safe-haven alternatives. 

Bond markets, particularly in the UK and Europe, faced heavy selling on fiscal and political concerns, pushing yields higher. Yet gold continued to rally despite elevated long-term rates—a dynamic underscoring its evolution into a term premium play, where investors seek protection against both fiscal dominance and currency debasement. 

At the same time, tariff uncertainty faded after the Trump administration formally exempted gold bullion from import duties, easing distortions in COMEX inventories and global trade flows. While this clarification could temper some of the “tariff premium” built into prices, the broader macro narrative of debt, currency devaluation, and systemic risk remains firmly bullish for gold into the Fed’s rate decision next week.