Gold’s Historic Rally
Gold prices blasted to new highs Monday, extending a rally that has the precious metal on pace for its best year since 1979. Futures climbed to around $3,750 per ounce, with spot bullion crossing $3,700.
The surge puts gold up more than 40% in 2025, outpacing nearly every major asset class. For perspective, the S&P 500 is up just 13%, while bitcoin has gained roughly 20% over the same period.
Macro Tailwinds: Fed Cuts and Dollar Weakness
The run in gold coincides with a clear shift in U.S. monetary policy. The Federal Reserve cut interest rates by 25 basis points last week, marking the start of an easing cycle expected to include two more cuts this year.
At the same time, the U.S. dollar index (DXY) has dropped 10% year-to-date, providing another tailwind since gold is priced in dollars. The combination of cheaper money and a weaker greenback has historically been rocket fuel for bullion.
Institutional and Central Bank Demand
Beyond macro drivers, demand from institutions and central banks is surging:
- ETF inflows hit a three-year high.
- Central banks in Russia, China, and India have stepped up purchases to hedge against the dollar.
- According to Oppenheimer strategist John Stoltzfus, when these buyers act, “they buy in size.”
Gold has also become a crowded trade. Bank of America’s September fund manager survey ranked gold No. 2 in popularity, just behind the “Magnificent Seven” mega-cap tech stocks.
Investor Positioning Still Light
Despite the price surge, many fund managers remain underweight. In the same BofA survey:
- 39% of managers reported zero allocation to gold.
- The weighted average allocation was just 2.3%.
This mismatch between price action and positioning suggests that conviction buyers — not broad market consensus — are driving the rally. Goldman Sachs echoed this, citing ETF inflows, speculative positioning, and renewed central bank accumulation. The bank reaffirmed its $4,000 per ounce target by mid-2026.
WSA Take
Gold’s run in 2025 is more than just a safe-haven play — it’s a sign that investors no longer trust fiat stability in a world of rate cuts, geopolitical risks, and a weakening dollar. Central banks aren’t just hedging — they’re making a statement about shifting economic power.
For individual investors, the opportunity lies in timing. Gold may be crowded, but fund managers are still under-allocated, leaving room for more inflows if conviction spreads.
If you missed our recent coverage of Tesla’s surge toward a 2025 high, it’s a reminder that while tech stocks grab headlines, commodities like gold are quietly rewriting market history. For more insights, head to the Wall Street Access homepage.
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