GOLD has surged nearly 50% this year to an unprecedented $3,930 per ounce, driven by a fundamental shift in how investors view the precious metal’s role in their portfolios, said the Financial Times on Monday.
The rally, gold’s strongest since the 1970s, accelerated through September with a 12% monthly gain despite easing market volatility, as asset managers report growing interest in permanent allocations to bullion alongside traditional equities and bonds.
Michael Widmer, head of metals research at Bank of America, told the newspaper client enquiries about long-term gold holdings have increased significantly. “For the first time in a long time” there has been substantial interest from investors exploring strategic positions in gold,” he said.
This changing perspective could unlock trillions in potential inflows. Morgan Stanley has proposed a 60/20/20 portfolio split giving gold equal weight with fixed income, a dramatic departure from the two percent average allocation currently held by fund managers, said the Financial Times citing Bank of America surveys.
Exchange-traded funds have emerged as the primary vehicle facilitating this shift. Gold-backed ETFs have attracted more than $60bn in net inflows so far in 2025, a calendar-year record, with holdings now exceeding 3,800 tons approaching pandemic-era peaks.
Maya Bhandari, multi-asset chief investment officer at Neuberger Berman, said bond market volatility has enhanced gold’s appeal. “Gold looks a bit more attractive as a diversifier to long equity positions than bonds do,” she said.
Francesca Fornasari, head of currency solutions at Insight Investment, added that investors are deploying gold as a “tail hedge” against concerns over inflation and central bank independence. “We don’t want to have [a loss of Fed independence] as our base case, but we want to have something on,” she said.
The shift from tactical trading to strategic allocation represents a potentially transformative development for bullion markets.