Key Takeaways
- Gold prices hit an all-time high of $4,888 per troy ounce on Wednesday before paring some of those gains.
- JPMorgan estimates that gold’s share of total central banks’ reserves rose to a new record at the end of last year.
There’s nothing like a potential crisis to brighten the shine on gold.
Spot gold prices rallied to fresh highs on Wednesday, coming within dollars of $4,900 per ounce and leading investors and media to wonder when we might touch $5,000 for the first time. While U.S. stocks shook off Tuesday’s scare as affairs involving U.S. President Donald Trump, his European counterparts, and Greenland seemed to cool—Liberation Day déjà vu still drove investors to assets that hedge geopolitical uncertainty.
Gold, which recently traded closer to $4,800, also cooled a bit as market tensions receded. Silver, another precious metal that has been strong lately, was also recently lower.
WHY THIS MATTERS TO INVESTORS
The dollar-debasement trade was back in the spotlight as gold rallied to a new record high. Investors often acquire gold as a hedge against economic turmoil, political uncertainty, and inflation.
A big question, meanwhile, remains whether gold and silver can deliver another year of outsize returns. Precious metals were among the best performing major asset classes of 2025, with silver taking the lead with a 146% gain for the year and gold near the top. If investors continue to increase their allocations to gold like central banks did last year, higher spot prices could still follow.
JPMorgan analyst Nikolaos Panigirtzoglou last year identified the so-called “debasement trade,” where investors piled into assets viewed as hedges against their fears—persistently high government debt to geopolitical uncertainty—while panning the U.S. dollar.
Panigirtzoglou estimates that gold share of total central banks’ reserves rose in the last three months of 2025. Assuming central bank purchases were on pace with the average for the first three quarters of the year, the safe haven asset’s piece of the pie “may have risen to a new record high” near 30%, he said in a note last week.
Related Education
And veteran investors from Bridgewater Associates’ Ray Dalio to DoubleLine Capital’s Jeff Gundlach have recently talked up the merits of having an allocation to gold.
Meanwhile, dollar reserves continued to see outflows, with the greenback’s share in foreign exchange reserves sitting at the lowest levels in more than 25 years, according to the JPMorgan report.
Central banks’ preference can be seen in the diverging performance of the U.S. dollar index and popular gold ETF SPDR Gold (GLD) over the past year. The former is down almost 9%, while the latter is up more than 75% over the same period.