Gold emerges as top global asset of 2025 as prices surge nearly 60%

Farhan Badami, market analyst at eToro/Image: Supplied

Gold is on track to close 2025 as one of the strongest-performing assets worldwide, gaining almost 60 per cent year-to-date — its best annual performance in more than four decades — according to Farhan Badami, market analyst at eToro.

Despite a slight pullback from the record highs reached in October, sentiment around the metal remains robust as markets head into the Federal Reserve’s final policy meeting of the year. “Markets remain convinced that a December rate cut is coming, and the backdrop still supports that view,” Badami said.

He noted that although inflation data has been uneven, pricing pressures have not re-accelerated in response to recent tariff policies, reducing the likelihood of a more aggressive Federal Reserve stance. The ongoing US government shutdown has further complicated policy-making, limiting access to real-time economic data. Even so, market confidence has held firm, with the S&P 500 up roughly 5 per cent from its November low on expectations that easing is already priced in.

Badami said Federal Reserve Chair Jerome Powell faces a communications challenge this week. “He needs to strike a balance between confidence that inflation continues to move in the right direction and reassurance that the Fed is not cutting because it fears a sharper downturn,” he said.

Gold has benefited this year from sustained safe-haven flows, elevated geopolitical tensions, and unprecedented central bank buying. ETF inflows have reached record levels, reflecting demand from institutional investors as well as younger retail buyers reallocating into defensive assets.

Looking ahead to 2026, Badami said the key question is not whether gold can hold its appeal, but how high prices could go if uncertainty persists. “Central banks look set to keep accumulating bullion as they hedge against currency and inflation risks. That steady official demand remains a strong anchor for prices, and $5,000 is not off the table,” he said.

The macroeconomic drivers that propelled gold to new highs this year — geopolitical volatility, persistent inflation concerns, and shifting US fiscal dynamics — show few signs of easing. With renewed uncertainty surrounding President Donald Trump’s administration, Badami expects investors to continue allocating to the metal. The environment, he added, “sets the stage for another year in which investors continue to seek comfort, stability, and protection in the world’s oldest safe haven.”