Move over, Magnificent Seven. Step aside, AI. See you later, data center. The financial markets have a new golden child—gold itself. And don’t be surprised if it stays that way.
Gold has gained 57% in 2025, while delivering new all-time closing highs 21 times over the past 63 trading sessions. The S&P 500 has advanced just 13.2% this year, and even Nvidia, the best-performing of the Mag 7 stocks, has risen just 34%.
The rally in gold prices didn’t come out of nowhere. Central banks have been net buyers of gold following the Russian invasion of Ukraine—no one likes to have their dollar reserves frozen—while relatively loose financial conditions have also helped spur demand. Private investors in the U.S., Europe, and China have piled into gold too.
So although the metal is trading at well over $4,000 an ounce, there are still many prominent bulls, including JPMorgan Chase CEO Jamie Dimon, who said it “could easily go to $5,000, $10,000 in environments like this,” adding that “this is one of the few times in my life it’s semi-rational to have some in your portfolio.”
But let’s not get ahead of ourselves. Gold can’t go up forever, and there are some signs that the precious metal might be due for a respite. For one, silver prices hit their first record high since 1980, a sign that investors have found another shiny distraction. “This is typically a late-cycle phenomenon of precious metals, as investors chase returns,” the strategists at PGM Global write. “In periods where investors chase returns in the gold proxies, when those metals weaken, it often bodes ill for gold prices as well.”
Investors, though, are still looking for a catalyst. The one thing that is almost guaranteed to end a gold rally is a Federal Reserve tightening cycle, writes Louis-Vincent Gave, CEO of Gavekal Research, who calls higher rates “the most obvious killer of precious metal bull markets.”
That’s not likely to happen anytime soon. The central bank, after all, is lowering rates, not raising them. Higher oil prices could also be a threat to gold, but oil has been under pressure of late, and a glut of gold is unlikely as suppliers haven’t had much cash in recent years to fund a quick ramp-up in production, Gave writes. A stronger yen or renminbi could also hit gold prices—stronger currencies wouldn’t push Asian savers into the safety of gold—but there’s little sign of that in either currency.
Even the charts suggest nothing more than a hiccup on the way to more gains. While Deutsche Bank analyst Michael Hsueh notes that the current gold rally may have already peaked from a technical perspective, it shows no “ sign of an impending correction. At most, it may point to a period of more neutral behavior.”
And let’s face it—standing in the way of a face-ripping rally isn’t easy. Even PGM’s strategists aren’t exactly bearish, they’re simply waiting for a pullback. “[We] still like gold but would wait until a consolidation phase before adding more,” they write.
So perhaps it’s best to forget the notion that something will stop the gold rally, at least right now. In fact, history suggests that gold’s extraordinary run has more legs, according to SentimenTrader. The firm notes that when gold has set this many new highs in a three-month period, it has typically been higher one year later 80% of the time. Runs like this are “exceptionally rare, with precedents seen only during some of gold’s most powerful historical advances,” it writes.
So if there is a dip, investors shouldn’t feel blue but embrace the yellow metal.
Write to Teresa Rivas at teresa.rivas@barrons.com
