Gold is experiencing one of its most impressive surges in decades—and this often signals serious problems in the global economy.
This week, the price of an ounce exceeded $4,000 for the first time, and on Wall Street, a growing number of analysts believe the current rally is only gaining momentum. Historically, gold investments rise not during periods of prosperity, but when investors seek protection from instability, inflation, and geopolitical risks.
Gold Sets New Records, and Markets Continue to Rise
The precious metal’s current rise has already made history: since the beginning of the year, gold prices have increased by more than 54%—the best performance since 1979. Back then, the US was struggling with double-digit inflation and an energy crisis, but the current surge is occurring against a backdrop of parallel stock market growth, which is particularly unusual.
Strong interest in technology and artificial intelligence continues to push shares of major companies higher. However, as David Kotok of Cumberland Advisors notes, “the stock market and gold are moving along different trajectories—one reflects optimism, the other signals alarm.”
Why Gold Is Rising: Inflation, a Crisis of Confidence, and Central Bank Policy
The acceleration in price growth is linked to several global factors. US inflation has remained above the Federal Reserve’s 2% target for more than four years, tariffs have reached record levels, and Japan’s new prime minister has pledged to lower rates and increase borrowing.
The US government shutdown, which froze the release of macroeconomic data, heightening uncertainty, provided additional impetus to growth. Against this backdrop, investors are shifting to an asset that is not dependent on government decisions—gold.
“The global economy has not yet passed the resilience stress test,” noted IMF Managing Director Kristalina Georgieva. “Growing demand for gold indicates that market participants are preparing for serious challenges.”
Central banks are buying gold, and the dollar is losing its status.
The weakening dollar is another key driver of growth. The American currency is experiencing one of its worst years in decades, raising questions about its safe haven status.
Central banks are actively increasing their gold reserves, including after the US and its allies froze Russian assets in response to the invasion of Ukraine. This move has forced many countries to consider diversifying their reserves.
Goldman Sachs predicts that the price of gold could reach $4,900 per ounce by the end of next year. This will be driven by interest from both central banks and private investors, as well as a likely cut in Fed rates.
Investors seek protection from dollar dependence
Billionaire and founder of the hedge fund Citadel, Ken Griffin, stated that he is concerned about the growing interest in gold as a more reliable asset than the dollar:
“We are seeing a desire among investors to move away from dollar dependence. Demand for assets not tied to the US dollar is growing—this is the beginning of a large-scale de-dollarization,” he emphasized.
