Gold setting records for ‘bad reasons’, warns strategist

Gold’s record-breaking rally in 2025, which has brought the metal within reach of $4,000, may be signaling an underlying concern.

Specifically, according to Bloomberg Intelligence’s Mike McGlone, gold is on track for its best annual performance since 1979, with the Bloomberg Gold Subindex up nearly 39% over the past year.

Silver and other precious metals have also seen sharp gains, while the S&P 500 has risen by just under 17%.

In an X post on August 26, McGlone suggested that gold’s rise reflects worries over the durability of U.S. market performance. 

He noted that the rally could appear more justified if stock market volatility, which fell to historic lows in September, rebounds in the coming year.

The record demand for gold, he argued, may point to the limits of America’s wealth-creation model, potentially influenced by policy shifts under the Trump administration.

He noted that while precious metals have surged, base metals such as copper, aluminum, and nickel have lagged, signaling weakness in the real economy. Gold’s rally appears driven more by caution than growth, reflecting investor unease over future risks.

Overall, gold is set for its best year since 1979, rising nearly 40% in 2025 on strong investment demand, central bank buying, and expectations of U.S. rate cuts. 

JPMorgan forecasts an average of $3,675 an ounce by year-end, with the potential to hit $4,000 if volatility rises and the dollar weakens.

Silver recently topped $45, its highest since 2011, driven by industrial demand for solar panels, EVs, and electronics amid a supply deficit. 

Analysts project $40 to $50 by year-end, with further gains possible if green energy demand grows.

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