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A safe haven asset that’s doubled in value in the past three years, draws more investors while geopolitics become more turbulent, and keeps getting its analyst price targets raised as the Fed prepares to smash the rate cut button. That might sound like a crypto sales pitch. But it’s gold (GC=F).
By the numbers, the precious metal is shimmering. Gold prices are up more than 40% this year, far outpacing the S&P 500’s (^GSPC) 10% gain. Even bitcoin (BTC-USD), which has enjoyed a record-setting year thanks to the Trump administration’s embrace, has been left in the yellow-speckled dust with a mere 20% gain.
Unlike the stock market and its rising tides, there are people on the other end of this trade. Gold’s rise also serves as a barometer of the economic mood — and not in a good way.
Many of the factors lifting gold prices would be considered disconcerting outside of the context of an appreciating asset. Gold’s identity and benefit as a store of value are intertwined with financial turmoil. People, governments, and institutions don’t normally seek refuge when things are going well, and typically, when they do, they are competing with the US dollar and various iterations of longer-term bonds.
On the other hand, the peak of the 5,000-year-old store of value comes not in spite of, but alongside a record high for tech stocks and an overall embrace of bullishness in the stock market.
The potential for lower interest rates, as a salve to a struggling labor market, has electrified the markets. What on its face was the bad news of higher unemployment also came with the good news of an expected rate cut, perhaps even a jumbo cut. Lower rates tend to mean higher gold prices, as the safe-haven asset becomes more attractive compared to risk-free investments.
Even before all of that, however, the post-pandemic era of global politics has shaken up long-standing alliances and given rise to new tensions among governments. President Trump’s trade policy injected fresh uncertainty into the economic outlook and prompted investors to hedge against US assets.
According to an analysis by Morgan Stanley Research, the US dollar ended the first half of 2025 with its biggest loss since 1973, and pressure against the greenback is likely to continue. As a protection against inflation and devaluing currency, gold makes sense.
You can see where the gains have come from on the opposite end of the ledger. The US dollar index (DX.Y.NYB) has declined nearly 10% year to date, while the long-dated Treasury yields have stayed high — even with the next rate cut coming into view. The world is having trust issues with US dollars and debt and turning to other, shinier things.
Policymakers around the world are playing a role too, as they have amped up their purchases of gold. In fact, foreign central bank holdings of gold have topped US Treasurys for the first time since 1996, according to Bloomberg data compiled by Crescat Capital macro strategist Tavi Costa.
The White House’s pressure campaign against the Federal Reserve has also added to gold’s luster as those trust issues evolve. In a recent note, Goldman Sachs analysts said that gold could surge to $5,000 an ounce by 2026 if the Fed’s independence is threatened and investors shift even a small amount of their holdings from government bonds to gold.
But the foundation of gold’s bullishness is defensiveness, not a world-changing technology or financial innovation, which leads to the obvious question of when the wind blows the other way.
No one is getting instantly rich off the idea of a gold treasury company. This isn’t the perpetual motion machine of bitcoin and its lesser peers. Gold is inert. But that’s also its ultimate selling point: The precious metal has the benefit of not pretending to be anything else.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
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