Gold just smashed $4,000. Here’s what’s really powering its best year since 1979

Gold is having a year — the kind that usually shows up when nerves are frayed. The metal blew past $4,000 an ounce this week and is up about 54% in 2025, putting it on pace for its strongest run since 1979. Back then it was oil shocks and double-digit inflation. Today it’s a stew of inflation that won’t quit, a wobblier dollar, and a world increasingly hedging its bets.

What makes this surge weird is the company it’s keeping. Stocks are ripping on AI euphoria while gold — the classic “something’s wrong” trade — is ripping too. As Cumberland Advisors’ David Kotok put it, they’re “marching to the beat of two very different drummers.”

Under the hood, a few forces are doing the heavy lifting. Inflation has sat above the Fed’s 2% target for more than four years, tariffs are back to levels not seen since the 1930s, and a government shutdown has even blinded investors and policymakers by freezing key economic data. Add political shifts abroad — Japan’s incoming leader favoring easier money — and you get a backdrop tailor-made for hard assets.

Then there’s the dollar. It’s having one of its worst years in decades, which tends to turbocharge gold since bullion is priced in greenbacks. That slide has some on Wall Street openly worrying about the dollar’s safe-haven crown.

“We’re seeing substantial asset inflation away from the dollar as people look to effectively de-dollarize,” Citadel’s Ken Griffin warned this week.

Central banks are reinforcing the trend. After the US and allies froze Russia’s reserves in 2022, more countries began diversifying out of dollars and into gold. That steady buying has been a powerful floor under prices — and a signal that official money is nervous, too. IMF chief Kristalina Georgieva captured the mood:

“Global resilience has not yet been fully tested… Just look at the surging global demand for gold.”

Wall Street, never shy about a bandwagon, is leaning in. Goldman Sachs now sees gold reaching $4,900 by the end of next year, citing central-bank demand, retail flows, and the prospect of more Fed rate cuts — which make non-yielding bullion look better next to bonds.

Put it together and the message is pretty simple. Even as investors chase AI-supercharged equities, they’re also buying insurance against policy missteps, geopolitical shocks, and a wobbling dollar. Gold is that insurance. When both fear and greed are in charge at once, you get a metal at record highs and a stock market at records, too.

Bloomberg, CNN, Axios, and Business Insider contributed to this report.