Gold prices extended their rally on Monday, climbing to fresh record highs and setting the stage for what could be the precious metal’s best year in nearly half a century. Futures contracts rose to around $3,750 per ounce, while spot bullion held above $3,700. With a gain of more than 40% year-to-date, gold is on track for its most impressive annual performance since 1979.
The remarkable run has been fueled by a combination of macroeconomic forces, led by expectations of an extended Federal Reserve easing cycle. Last week, policymakers cut interest rates for the first time this year and signaled the likelihood of two more reductions before year-end. Lower rates typically enhance the appeal of gold, which does not generate yield, by reducing the opportunity cost of holding the asset.
A weakening U.S. dollar has added another layer of support. The dollar index, which tracks the greenback against a basket of major currencies, is down roughly 10% in 2025, giving gold buyers in other currencies stronger purchasing power. The dual dynamic of a softer dollar and looser monetary policy has created a powerful tailwind for the precious metal.
Investor demand has also been evident through record inflows into physically backed gold exchange-traded funds, which recently hit a three-year high. At the same time, central banks, particularly in emerging markets, have steadily expanded their reserves, increasing their reliance on gold as a hedge against currency volatility and shifting global trade dynamics.
Gold’s surge has easily outpaced traditional risk assets. The S&P 500 has gained about 13% this year, while bitcoin has advanced close to 20%. In contrast, gold’s rise above 40% underscores its position not only as a hedge during uncertain times but also as a top-performing asset class in 2025.
Fund manager sentiment reflects the divide between performance and positioning. A recent survey by Bank of America found gold now ranks as the second most crowded trade, just behind major U.S. technology stocks. Yet despite the recognition, the average allocation to gold among managers remains low at just over 2%, suggesting there could be room for further institutional participation.
Analysts remain constructive on the outlook. Goldman Sachs recently reiterated its view that gold could climb toward $4,000 per ounce by mid-2026, citing structural demand from ETFs, robust speculative interest, and accelerating central bank purchases. With geopolitical risks, trade uncertainty, and global monetary easing all converging, gold may continue to attract flows from investors seeking safety and diversification.
As 2025 heads into its final quarter, gold is not only outperforming but also reshaping how investors think about portfolio protection in a shifting economic landscape. Whether the momentum sustains into 2026 will depend on the trajectory of inflation, interest rates, and global risk appetite, but for now, gold is shining brighter than it has in decades.