Gold is closing out 2025 in remarkable fashion, turning from a quiet portfolio staple into the story of the year in global markets. The metal is on track for its best performance since the late 1970s, reshaping how investors, central banks and governments think about safety in an increasingly volatile world.
Gold Surges As Global Risks Pile Up
Gold futures traded in New York have jumped almost 71% this year, putting them on pace for their strongest annual gain in 46 years. The last time the market saw anything like this was 1979, when Jimmy Carter was in the White House, inflation was spiralling, and the US was wrestling with an energy crisis and turmoil in the Middle East.
The echoes with today are hard to miss. Trade tensions have been inflamed by tariffs, Russia‘s war on Ukraine grinds on, flashpoints between Israel and Iran have raised fears of wider conflict, and the US has even seized oil tankers off Venezuela‘s coast. In that sort of climate, investors have reverted to what they know—turning to gold as a classic safe haven, trusted to hold its value if inflation flares or major currencies suddenly weaken.
‘Uncertainty remains a defining feature of the global economy,’ said Joe Cavatoni, senior market strategist at the World Gold Council. ‘In this environment, gold has become increasingly appealing as a strategic diversifier and a source of stability.’
Gold Prices, Fed Policy And The Race To $5,000
Gold’s rally has been relentless. Futures started the year at around $2,640 a troy ounce before smashing through a record $4,500 a troy ounce on Monday. Analysts at JPMorgan Chase now expect prices to climb above $5,000 a troy ounce in 2026, a level that would have sounded fanciful only a few years ago.
One long‑standing criticism of gold is that it does not pay an income, unlike bonds. That weakness becomes far less of an issue when the US Federal Reserve is cutting interest rates—as it has been in recent months—pushing bond yields lower and making non‑yielding assets like gold relatively more attractive. Expectations for further Fed rate cuts in 2026, alongside a weaker US dollar that makes bullion cheaper for overseas buyers, are helping support the surge.
The performance has left equities in the shade. Gold’s 71% rise this year dwarfs the S&P 500’s 18% gain, and even in 2024, gold futures’ 27% advance slightly outpaced the S&P’s 24%. The rally is being felt well beyond trading screens: jewellers and people who own gold jewellery are sitting on more valuable holdings, while demand has been so intense that US shoppers have even been snapping up gold bars from Costco.
Gold And Geopolitics: Central Banks Join The Hunt
The most powerful buyers in this bull run are not retail investors but central banks. Their accumulation has added a geopolitical edge to the gold story, led by China‘s steady push to increase its reserves. One key reason, according to Ulf Lindahl, CEO at Currency Research Associates, is a desire to reduce exposure to US assets such as Treasury bonds and the dollar.
That shift accelerated after Russia’s invasion of Ukraine in 2022, when Western governments froze Russian assets denominated in US dollars. The move jolted policymakers in Moscow and Beijing, prompting them to look for assets that are harder to seize—gold sits at the top of that list.
‘The current wave of central‑bank buying is different precisely because it is rooted in geopolitics,’ said Ole Hansen, head of commodity strategy at Saxo Bank. ‘The freezing of sovereign reserves and the broader fragmentation of the global financial system have introduced a structural element to gold demand that is likely to persist for years.’
Central banks have now built up more than 1,000 tonnes of gold in each of the last three years, far above the 400 to 500 tonne average of the previous decade, according to the World Gold Council. That persistent official‑sector demand is tightening supply in the market and reinforcing the sense that gold has regained its place at the heart of the global financial system.
Gold And Beyond: Precious Metals Ride The Wave
Gold’s dramatic ascent has dragged other precious metals higher. Silver futures have rocketed 146% this year, while platinum has surged almost 150% and palladium is up 100%. For many investors, these metals are serving the same purpose as gold—’a hedge against an increasingly uncertain world,’ in the words of Hakan Kaya, portfolio manager at Neuberger Berman.
That theme may have further to run. Lindahl said he expects gold to keep rising in 2026, as central banks continue to boost their reserves, leaving less bullion available in the open market. If regular investors keep piling in at the same time, that combination of rising demand and constrained supply could push prices higher still.
Matt Maley, chief market strategist at Miller Tabak + Co, pointed to another force at work: growing alarm over vast government deficits and mounting debt burdens. ‘As investors have become more cognizant of these issues, they have been looking toward gold as a safe haven,’ Maley said. In a year defined by political tension and financial anxiety, the world’s oldest store of value has rarely looked so modern.