Gold Soars to Record Highs, Poised for Best Year Since 1979
Gold prices have reached new record highs, with the precious metal on track for its largest annual gain in over 45 years. This surge is driven by factors including expectations of a Federal Reserve easing cycle and a weaker US dollar.
Gold's Remarkable Rally
Gold futures surged to approximately $3,750, while bullion for immediate delivery traded above $3,700 per ounce. The precious metal is up more than 40% year to date, marking its best performance since 1979, according to research by Carson Group.
This impressive run has been fueled in part by anticipation of a Fed easing cycle, initiated last week with a 25 basis point interest rate cut and the suggestion of two further reductions in 2025.
Factors Driving the Price Surge
A weakened US dollar has also significantly contributed to gold's rise, as the metal is priced in US currency. The dollar index (DX-Y.NYB), which measures the dollar against a basket of currencies, has fallen by around 10% year to date.
Furthermore, inflows into physically backed exchange-traded funds (ETFs) have reached a three-year high, and central banks continue to accumulate gold reserves.
"We see it really driven by central banks from around the world particularly those in emerging markets, and of those markets, Russia and China and India...buying gold to hedge their currencies versus the dollar,"
- John Stoltzfus, Oppenheimer chief investment strategist, told Yahoo Finance.
Gold Outperforms Other Assets
The performance of gold has far exceeded that of the S&P 500 (^GSPC) and even Bitcoin (BTC-USD), which are up 13% and 20% respectively, during the same period.
According to a September Bank of America fund managers survey, gold has climbed to the second most crowded trade, just behind the "Magnificent Seven" stocks.
Analyst Outlook and Future Projections
Despite the surge, 39% of surveyed fund managers stated that their current gold position is closest to 0%. The weighted average allocation among all participants was only 2.3%.
Earlier this month, Goldman Sachs analysts highlighted that gold's breakout reflects "conviction buyers stepping up purchases," including ETF holdings, stronger speculative positioning, and renewed demand from central banks after a seasonal summer lull. The firm has reiterated its price target of $4,000 per troy ounce by mid-2026.
