Joe Elkjer
Precious Metals Advisor
Joe Elkjer, a Precious Metals Advisor at Scottsdale Bullion & Coin since 2019, specializes in helping clients protect their assets through tangible investments. With a strong background in business and finance, he emphasizes stellar customer service and stays dedicated to informing clients about market impacts through frequent appearances on The Gold Spot.
In an era of economic uncertainty and geopolitical volatility, the interplay between monetary policy, currency stability, and international conflicts is creating a fertile ground for safe-haven investments. As of September 2025, central banks worldwide, led by the U.S. Federal Reserve, are slashing interest rates in response to slowing growth and persistent inflation pressures. This move, while aimed at stimulating economies, poses significant threats to the U.S. dollar’s dominance. Compounding these economic headwinds are rising global tensions in hotspots like Venezuela, Israel, and Ukraine, which are exacerbating fears of supply chain disruptions, energy crises, and broader instability. Together, these factors are poised to drive gold prices to new heights, as investors flock to the yellow metal for protection against inflation, currency devaluation, and chaos on the world stage.
Lowering Interest Rates: A Double-Edged Sword for Economic Recovery
Central banks have long used interest rate adjustments as a primary tool to manage economic cycles. In 2025, the Federal Reserve has continued its pivot toward easing, with multiple rate cuts implemented to combat a potential recession. With the Fed expected to cut the benchmark rate by 50 basis points at the September meeting, bringing it to a range of 4.25%-4.50%. This follows a series of cuts initiated in late 2024, driven by cooling inflation and rising unemployment concerns. Similar actions are being taken globally: the European Central Bank (ECB) and Bank of England have also lowered rates, signaling a coordinated effort to boost liquidity and encourage borrowing.
While lower rates can spur investment and consumer spending, they come with risks. Cheap money often leads to asset bubbles and higher inflation over time. In the U.S., persistent fiscal deficits—exceeding $2 trillion annually—combined with these cuts, are fueling debates about long-term sustainability. Economists warn that prolonged low rates could erode confidence in monetary policy, particularly as global growth remains uneven.
Threats to the Dollar: Erosion of Hegemony Amid Economic Shifts
The U.S. dollar has enjoyed unrivaled status as the world’s reserve currency since the post-World War II era, facilitating trade, oil pricing (petrodollar system), and international reserves. However, 2025 has seen mounting threats to this dominance. Lower interest rates directly weaken the dollar by reducing its appeal to foreign investors seeking higher yields. The Dollar Index (DXY) has dipped below 100, reflecting a 5% decline year-to-date.
Broader challenges include de-dollarization efforts by BRICS nations (Brazil, Russia, India, China, South Africa), who are increasingly settling trades in local currencies or alternatives like the yuan. China’s push for a digital yuan and Russia’s stockpiling of gold reserves are accelerating this trend. Additionally, U.S. sanctions on adversaries have backfired, prompting countries to diversify away from dollar-denominated assets. High U.S. debt levels—now surpassing $35 trillion—and political gridlock over fiscal reforms further undermine trust. Analysts from institutions like JPMorgan predict that if these trends persist, the dollar could lose 20-30% of its reserve share by 2030.
Rising Global Tensions: Flashpoints in Venezuela, Israel, and Ukraine
Geopolitical risks are at a boiling point in 2025, with conflicts in key regions threatening global stability and economic flows.
In Venezuela, political turmoil has intensified following disputed elections and economic collapse. President Maduro’s regime faces renewed opposition challenges, backed by U.S. sanctions that have crippled oil exports—the country’s lifeblood. Recent protests and border disputes with Guyana over oil-rich territories have raised fears of military escalation. Oil prices have spiked intermittently due to supply fears, with Brent crude hovering around $85 per barrel. This instability not only disrupts energy markets but also contributes to inflationary pressures worldwide.
Israel’s conflicts remain a powder keg in the Middle East. The ongoing war with Hamas in Gaza, now in its third year, has expanded to include skirmishes with Hezbollah in Lebanon and proxy confrontations with Iran. In 2025, escalated airstrikes and ground operations have led to humanitarian crises and regional alliances shifting, with Saudi Arabia and others calling for ceasefires amid fears of a wider war. Disruptions in the Red Sea shipping lanes due to Houthi attacks—linked to the Israel-Hamas conflict—have increased global shipping costs by 20-30%.
Ukraine’s war with Russia shows no signs of abating, entering its fourth year with intensified drone and missile exchanges. Russian advances in the east, coupled with Ukraine’s counteroffensives supported by NATO arms, have led to energy shortages across Europe. Natural gas prices have surged, and grain exports from the Black Sea region remain volatile, contributing to food inflation. Western sanctions on Russia have fragmented global trade, pushing energy-dependent economies into recessionary territory.
These tensions are interconnected: Venezuela’s oil woes amplify energy shocks from Ukraine, while Middle Eastern instability raises the specter of broader supply chain breakdowns.
Why Gold Prices Are Set to Soar
The confluence of lower interest rates, a beleaguered dollar, and geopolitical flashpoints creates a textbook scenario for gold’s ascent. Gold, historically a hedge against inflation and uncertainty, thrives in environments of currency weakness and risk aversion.
Lower rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive than bonds or cash. A weakening dollar further boosts gold, as it’s priced in USD—meaning a cheaper dollar translates to higher nominal prices. Geopolitical tensions amplify this by driving “flight to safety” behavior: investors dump equities and fiat currencies for tangible assets. For example, during past crises like the 2008 financial meltdown or the 2022 Ukraine invasion, gold rallied 20-50%.
In 2025, these dynamics are already evident. Gold has breached $3,500 per ounce, up 72% year-to-date, with forecasts from Goldman Sachs predicting $4,400 by mid-2026. Venezuela’s oil disruptions and Ukraine’s energy wars could push commodity prices higher, stoking inflation that gold counters. Israel’s conflicts risk spilling into oil-producing regions, further eroding dollar confidence as petrodollar alternatives gain traction.
Central banks are also stockpiling gold at record rates—over 1,000 tons annually—to diversify reserves amid dollar threats. Retail investors, via ETFs like GLD, are following suit. In essence, this perfect storm of economic easing, currency erosion, and global strife positions gold not just as a safe haven, but as a strategic imperative for portfolios navigating turbulent times.
As the world grapples with these challenges, gold’s luster shines brighter, reminding us that in uncertainty lies opportunity—for those prepared to seize it.