Gold prices have absolutely exploded in 2025, having risen an astounding 35% already! For the very first time in all of history, they thus have broken above $3,500 per ounce! This record-breaking increase follows a time when investors looked for imperviousness in an unpredictable financial landscape, with gold standing out as unshakable compared to classic equities. The S&P 500 returned a meager 9% over that time. At the same time, the Dow Jones Industrial Average increased by 6%, and the tech-heavy Nasdaq surged by 10%.
Market analysts have pointed to a trio of leading economic indicators behind this boom of gold prices. A potential near-term interest rate cut from the Federal Reserve could diminish competition from short-term U.S. bonds, making gold an increasingly attractive investment. Inflation is soaring, and new job creation is decelerating. Consequently, investors are fast coming to view gold as a reliable forecasting hedge against these emerging economic headwinds.
During the past few months, long-term bond markets have been under tremendous stress. Simultaneously, the U.S. dollar has depreciated, causing investors to look towards gold as a safer investment. The dollar’s value against other currencies plummeted by approximately 11% during the first half of 2025, reflecting a growing shift away from its status as a global reserve currency. This plummeting value has only rocked the alternative asset boats further, making gold an even more attractive asset to acquire.
With portfolios for many countries and institutions historically heavily weighted to U.S. dollar assets, they are all actively working to diversify their portfolios. Plenty are adding gold to their overall strategies as a form of protection and offense.
“Countries and institutions are diversifying their portfolios, which are heavily weighted to U.S. dollar assets. They’re adding something else – and that something else is in part gold,” – Campbell Harvey, professor at Duke’s Fuqua School of Business.
Aakash Doshi is Managing Director, Head of Gold Strategy at State Street Investment Management. In short, he says his outlook on gold is bullish because of the current market coxswain. One thing he emphasizes is how the Federal Reserve’s expected moves are being shaped by the very tight labor market we’re experiencing today.
“The Fed is cutting because of a weak labor market but inflation is still elevated. That supports alternative fiat assets like gold,” – Aakash Doshi.
The current economic landscape has raised concerns about a potential recession, leading many to seek safe havens for their investments. Harvey reiterates developing odds for an economic downturn, adding momentum to the migration to gold.
“The probability of an economic slowdown has greatly increased and people naturally look for a safe haven asset,” – Campbell Harvey.
Gold is getting a lot of buzz at the moment. In fact, futures markets are putting the odds at 91% that the Federal Reserve cuts interest rates by a quarter-point. Not only it would be another factor leaning bullish on gold prices, contributing to its attractiveness as an investment.
