Gold Prices Surge Amid Economic and Geopolitical Concerns
Gold has continued its remarkable ascent in 2025, with prices climbing about 35% year-to-date and spot gold nearing $3,600 an ounce. This robust performance reflects growing investor interest as economic uncertainty mounts and markets increasingly anticipate a Federal Reserve interest rate cut.
“Without a doubt, gold has been trending higher, and it’s getting a lot of attention from investors,” said Blair duQuesnay, a chartered financial analyst and investment advisor at Ritholtz Wealth Management.
Gold’s Role as a Safe-Haven Asset
Research from the Federal Reserve Bank of Chicago underscores gold’s reputation as a protective asset during economic downturns. The metal typically performs well in low-interest-rate environments and periods of political or financial instability.
Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, noted, “Gold checks all of those boxes.” Wells Fargo’s latest investment report highlights expectations for continued gold purchases by global central banks and increased geopolitical tensions to sustain demand for precious metals.
Preferred Investment Vehicles: ETFs Over Physical Gold
Investors seeking exposure to gold face a choice between physical bullion and financial instruments linked to gold prices. Most financial experts advocate for gold exchange-traded funds (ETFs) that track physical gold prices, citing advantages in liquidity, tax efficiency, and lower costs compared to owning physical gold.
“In times of acute stress, gold stocks underperform, so to the extent that people want exposure, a gold bullion-backed ETF does a better job than gold-related equities and gold miner stocks,” Samana explained.
SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) stand out as the two largest and most popular gold ETFs, according to ETF.com.
DuQuesnay emphasized, “Gold ETFs are going to be the most liquid, tax efficient and low-cost way to invest in gold.” She noted that physical gold ownership is less efficient due to higher transaction costs and storage requirements.
Alternatively, gold mining stocks tend to be more influenced by company-specific fundamentals rather than the price of gold itself, making them a less direct play on bullion prices.
Portfolio Allocation and Caution Amid Volatility
Despite gold’s strong performance, financial advisors generally recommend that investors allocate less than 3% of their portfolios to gold. DuQuesnay, a member of the CNBC Financial Advisor Council, disclosed that she does not currently hold gold in client portfolios, citing the unpredictable nature of trending assets.
“Are we in the third inning of this rally or the ninth inning? Gold is priced as a commodity, and that can make it hard to pinpoint the fundamentals,” she remarked, underscoring the challenges in timing gold investments.
FinOracleAI — Market View
The ongoing surge in gold prices reflects heightened investor demand driven by economic uncertainty and expectations of Federal Reserve easing. This environment supports safe-haven assets, bolstering gold’s appeal in the near term. However, gold’s commodity-like volatility and geopolitical developments pose risks that could trigger price corrections.
Investors should monitor Federal Reserve policy signals, geopolitical tensions, and central bank gold purchasing trends as key factors influencing gold’s trajectory.
Impact: positive
