Gold’s surge above $4,000 per ounce marks a historic milestone and one of its strongest annual performances in decades, with year-to-date gains of roughly 50 to 55 percent, according to market data from Reuters and the World Gold Council. The rally challenges decades of market logic: instead of rising only during economic distress, gold is climbing alongside equities—particularly AI-linked stocks—recasting how investors perceive risk, inflation, and the dollar’s credibility.
Traditionally, gold spikes when inflation surges or growth collapses—think 1980 or 2008—then retreats once confidence returns. But 2025 defies that pattern. Investors are betting on U.S. rate cuts while questioning the dollar’s long-term dominance, amid geopolitical tension and unease over central-bank autonomy.
“When you have a paradigm shift in how the current economic system is working, we’ve found in history that people always move to gold… the ultimate debasement hedge,” said Arun Sai, senior multi-asset strategist at Pictet, quoted in reporting by Vytautas Valinskas for Technology.org earlier this week.
A Paradox of Prosperity
The world’s two hottest assets—gold and AI stocks—are now advancing together, a rare pairing in financial history. Artificial-intelligence optimism keeps Wall Street buoyant even as politics and policy cast long shadows: France’s budget struggles, ongoing war in Ukraine, and fragile peace efforts in Gaza all weigh on sentiment.
Meanwhile, former President Donald Trump’s renewed tariff proposals and public criticism of the Federal Reserve have unsettled U.S. bond markets and pressured the dollar, which has fallen about 10 percent against major currencies this year, according to Bloomberg indices.
“People are equally bullish about AI as they are about gold,” observed Trevor Greetham of Royal London Asset Management. “If there were a deep recession and a crash in AI, you might find gold goes up another leg.”
Portfolio Mechanics—and Retail Momentum
Market strategists link the dual rally to modern portfolio balancing. Gold’s traditional inverse correlation with equities allows fund managers to hold more of it without adding risk—a principle known as the efficient frontier.
“When you’ve got equities on a massive great tear like this, some of that additional value in the equity markets will spill over into additional gold holdings,” explained Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX.
Retail enthusiasm adds fuel. Global gold-backed exchange-traded funds (ETFs) saw record inflows in Q3 2025—about US $26 billion, according to the World Gold Council.
“Every time somebody puts more money into the gold ETF, the ETF has to then go buy physical gold,” noted Gerry Fowler, head of equity strategy at UBS, citing what he calls “bubbly behaviour” among retail investors.
The Dollar Question
Beyond short-term trading lies a deeper story: global confidence in the U.S. dollar is weakening. Central banks remain net buyers of gold for the twelfth consecutive quarter, though official bullion now represents roughly one-fifth of global reserves—a notable increase, though not the “one-quarter” sometimes cited in commentary.
“Central banks are voting with their vaults,” said Mark Ellis, Chief Investment Officer at Nutshell Asset Management, who attributes part of the shift to U.S. trade policies. “Tariffs and political noise are accelerating the move away from dollar assets.”
With G7 inflation averaging around 2 to 2.5 percent and most major central banks either cutting or holding rates steady, investors increasingly view gold as both protection and opportunity. Whether this trend marks prudent diversification or a speculative bubble remains one of 2025’s defining financial questions.
