Why gold is having its biggest year since 1979
By Matt Egan, CNN
New York (CNN) — Gold is having a gangbusters year — and that’s typically a red flag about the state of affairs in the world.
This week, gold blew past $4,000 an ounce, and some on Wall Street are betting the rally is just getting started.
When investors pile in to gold, it’s not usually during good times, but when they feel like the world is on fire. It’s long been the go-to safe haven during economic stress and worries about inflation.
Gold and stocks, both moving higher
The 2025 gains for the precious metal are historic, surpassing prior turbulent periods such as after the September 11 terror attacks, the 2008 financial meltdown or even the pandemic.
Gold is up 54% so far this year, on track for its best year since 1979, according to FactSet. Keep in mind that was a time when the United States was grappling with double-digit inflation and a full-blown energy crisis.
What’s unusual about today’s gold spike is that it’s coming in tandem with a booming stock market.
Captivated by the potential of artificial intelligence, investors have piled into a handful of Big Tech companies that are carrying the entire stock market higher.
“The stock market and gold are marching to the beat of two very different drummers,” said David Kotok, co-founder of investment firm Cumberland Advisors.
‘Surging global demand’
The gold rally reflects unease about the economy and lingering concerns about inflation, which has been stuck above the Federal Reserve’s 2% target for the past four and a half years. The United States has hiked tariffs to the highest level since the Great Depression, and Japan’s incoming prime minister has endorsed lower interest rates and higher borrowing.
Gold has surged 5% so far this month as the US government shutdown leaves investors and Fed officials in the dark about the state of the economy by derailing major economic reports.
Against this backdrop, investors are piling into an asset that isn’t linked to a single government: gold.
“Global resilience has not yet been fully tested,” Kristalina Georgieva, managing director of the IMF, said in a speech on Wednesday. “There are worrying signs the test may come. Just look at the surging global demand for gold.”
One of the biggest drivers of the rally in gold is the fact that the US dollar is having one of its worst years in decades.
The dollar’s weakness has investors questioning the greenback’s long-held status as a global safe haven.
Central banks around the world are also piling in to gold.
This gained traction after Washington and allies punished Russia for its invasion of Ukraine by freezing Moscow’s assets held in the United States.
Those sanctions raised further questions among foreign officials about where to keep their money.
Goldman Sachs told clients this week gold will likely hit $4,900 by the end of next year. The Wall Street bank cited strong buying from central bankers, retail investors and looming rate cuts from the Fed.
Ken Griffin, the hedge fund billionaire who backed Trump in the last election, said this week it’s “really concerning” that investors are starting to see gold as a safer bet than the US dollar.
“We’re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize,” Griffin told Bloomberg.
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