As stocks climb to record highs heading into the year’s final stretch, gold continues to surge, powering above $4,500 an ounce on Wednesday to cap one of its strongest years in modern history.
The run-up is striking not just for its scale — gold is up roughly 70% in 2025 — but also because it’s happening alongside a rally in stocks.
On the optimistic side, investors are betting that the U.S. economy will remain strong into 2026, corporate earnings will hold up, and the Federal Reserve will issue a fresh series of rate cuts. Lower expected rates reduce the opportunity cost of holding non-yielding assets like gold. Investors may not instantly dump bonds and buy gold. But for some, when deciding where to put the next dollar, gold looks a little more appealing than it did before.
At the same time, there’s a defensive undercurrent. Inflation remains elevated. Widespread concerns about the political independence of key institutions like America’s central bank have dominated headlines throughout the year as President Donald Trump has pressured officials to slash rates at an unprecedented pace.
This mix has driven demand for gold as a hedge against institutional uncertainty and the effects of unpredictable policy. Perhaps unsurprisingly, other central banks have been a key force behind gold’s rise in 2025. Over the past year, official-sector purchases have surged as countries diversify reserves and reduce reliance on the U.S. dollar.
At the same time, inflows into gold-focused ETFs have risen, demonstrating interest from investors who had ignored such hedges during the headiest years of the tech boom — such as 2023, when the Nasdaq rose over 40%, and 2024, when it climbed another 30%.
The Nasdaq has still delivered double-digit returns this year — it’s set to close with a gain of about 20% — but such returns are somewhat more muted in context.
Other market forces appear to be at work, too. A less-valuable dollar makes gold cheaper for overseas buyers and increases the appeal of the “debasement trade.” And while silver and other precious metals have followed gold higher or even surpassed its recent rise, they’ve done so for slightly different reasons. Industrial demand and supply crunches have contributed to price moves, making gold the purest expression of safe-haven seeking and hedging behavior.
For now, given the degree of demand, investors are capturing both insurance and upside. Watching in real time as a “flight to safety” move becomes one of the best investments of 2025.
