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Gold Surges: Why Investors Are Betting on More Gains
10 Jan
Summary
- Gold experienced its strongest rally in nearly half a century in 2025.
- Central bank buying is expected to be a major driver of future price increases.
- US investors hold lightly in gold, despite its record-breaking performance.
Gold experienced an explosive rally in 2025, its strongest performance in nearly fifty years, surpassing inflation-adjusted records from 1980. This surge occurred amidst falling interest rates and geopolitical tensions. Despite the historic gains, many US investors continue to hold gold lightly. Portfolio managers are largely maintaining their positions, anticipating further price appreciation driven by sustained central bank purchases and declining confidence in major developed-market currencies.
Key factors supporting gold's continued appeal include increasing sovereign debts and attacks on central bank independence. These elements contribute to gold's positioning as an 'anti-fiat currency play'. Experts suggest reallocating portfolios to include real assets like gold as a hedge against inflation. While the mainstream understanding of this 'debasement trade' has grown, many believe gold's price is not yet fully reflecting these underlying economic trends.
Pension and insurance funds have shown increasing interest, with some new to gold allocating up to 5% of their portfolios. While the extraordinary upside potential of 2025 may not repeat, a bullish outlook persists. Central bank buying, particularly from nations seeking assets outside US influence, is seen as a stable demand source, expected to continue throughout 2026.
