Gold rocketed to an all-time high of $4,568.36 per troy ounce on January 12, 2026, capping off a jaw-dropping 64.3% surge in 2025—the precious metal’s best year since 1979. This historic rally is sending warning signals about the health of the dollar and potential risks for stock market investors.
Gold’s historic 64.3% surge in 2025 signals serious concerns about dollar stability and mounting risks for equity investors.
The surge reflects what analysts call a “debasement trade,” where investors fled paper currencies for hard assets. From October 2023 to December 2025, gold climbed an astonishing 148.8% in just 26.7 months. The metal smashed through the $4,000 per ounce barrier in October and hasn’t looked back.
What’s driving this gold rush? Several factors are at play. Central banks worldwide purchased 566 to 585 tons of gold per quarter, showing strong institutional demand. Exchange-traded funds saw 250 tons of inflows, while individual investors bought 1,200 tons in bars and coins during 2026. Gold now represents 2.8% of total equity and fixed income holdings. Central bank rate decisions and policy tools influence interest rates, which in turn affect currency values and gold demand.
The dollar’s weakness is boosting gold’s appeal. Lower US interest rates and concerns about America’s growing debt make non-yielding assets like gold more attractive. Rising debt-servicing costs and massive refinancing needs are putting pressure on the greenback. Some analysts believe a continued dollar downtrend could push gold above $5,000 per ounce.
Expert predictions are bullish. Goldman Sachs forecasts $4,900 by end-2026, while JP Morgan predicts $5,055 in the fourth quarter of 2026 and $5,400 by end-2027. State Street expects prices between $4,000 and $4,500 this year. A criminal investigation into Fed Chair Jerome Powell has intensified concerns about central bank independence, further fueling the flight to safe-haven assets.
Silver has joined the party too, surging 4.54% to $83.58 and posting a 181.78% gain over the past year. This extreme enthusiasm across precious metals reflects broader economic uncertainties.
However, risks remain. After such a historic run, gold could face a pullback. A more aggressive Federal Reserve raising interest rates could cool momentum. Additionally, gold set 53 all-time highs during 2025 on 21% of trading days, suggesting the rally might be overstretched. The traditional 60/40 portfolio strategy faces challenges as stock/bond correlations reached 30-year highs during the post-COVID inflation spike, making gold an increasingly attractive diversifier.
Geopolitical tensions and stagflation fears continue supporting prices, but investors should watch for potential volatility ahead.
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