The commodity has risen 17 per cent since the start of 2025, easily beating the return on government bonds, another popular destination for safety-seeking investors. The Pro Aurum gold house in Munich, Germany, on Jan. 10.Angelika Warmuth/Reuters
U.S. President Donald Trump’s chaotic policies might not be lifting economic forecasts, easing geopolitical tensions or facilitating global trade.
But investors who have wagered on gold since the start of his tenure aren’t complaining.
Gold has rallied to new heights above US$3,000 an ounce this year, as many investors run for the sort of protective cover that the commodity has traditionally supplied. A number of observers expect that upward pressure on the price will continue through 2025.
Goldman Sachs raised its end-of-year “baseline” price forecast last week to US$3,300 an ounce. Bank of America believes the price can rise to US$3,500 within two years.
Independent research firms are sounding even more bullish. Ed Yardeni, president and chief investment strategist at Yardeni Research, believes gold can hit US$4,000 by the end of the year and US$5,000 by the end of 2026.
David Rosenberg, founder of Rosenberg Research, expects that gold could rise to US$6,000 an ounce within five years, as a deteriorating U.S. fiscal picture, a weaker U.S. dollar and lower interest rates displace today’s concerns about the long-term impact of tariffs.
“The case for gold was there long before Donald Trump got elected. That’s just one part of the story,” Mr. Rosenberg said in an interview.
While much of the attention lavished on gold this year follows its record-breaking streak, the overall gains are what really stand out: The commodity has risen 17 per cent since the start of 2025, easily beating the return on government bonds, another popular destination for safety-seeking investors.
Gold stocks, which can exaggerate the underlying commodity when the costs of producers are fixed, have been performing even better.
The NYSE Arca Gold BUGS Index ETF, an exchange-traded fund that tracks dozens of gold producers, including Barrick Gold Corp. ABX-T, Agnico Eagle Mines Ltd. AEM-T and Kinross Gold Corp. K-T, has gained 31 per cent so far in 2025. Toronto-based Agnico, a standout, is up 37 per cent over this three-month period.
As broad U.S. equity benchmarks wobble and consumer confidence plummets, it’s little wonder that investors have been turning their attention toward a winning investment approach.
The SPDR Gold Shares GLD-A, the world’s largest gold ETF with more than 904 tonnes in its coffers, saw gold demand rise by 31.9 tonnes in the first two months of the year, according to data from the World Gold Council.
The second-largest gold ETF, the iShares Gold Trust IAU-A, saw demand rise by 18.6 tonnes over the same period.
Lina Thomas, an analyst at Goldman Sachs, expects that the inflows will continue if the Federal Reserve cuts its key interest rate by a combined half percentage point this year, as she expects, with another quarter-point cut in the first half of 2026.
“While ETF flows generally track Fed policy rates, history shows they can overshoot during extended periods of macro uncertainty – such as during the Covid-19 pandemic,” Ms. Thomas said in a note.
Investors aren’t the only players involved in this trade, though.
Central banks, particularly among emerging markets, currently hold about 10 per cent of their reserves in gold, according to Michael Widmer, a commodity strategist at Bank of America. He thinks they could increase this share to 30 per cent or more as part of a diversification strategy, adding a significant source of demand for years.
However, even bullish forecasters acknowledge that there are risks in the near term.
A peace deal between Russia and Ukraine could reduce the geopolitical rationale for holding gold. A U.S. policy reversal from sweeping tariffs could eliminate the need for a hedge against a full-on trade war that ignites inflation.
There is also the risk of gold becoming a victim of its own success, as investors pile on to a popular trade that then fizzles from too much optimism.
“Whenever something makes it to the front pages of the morning papers, no matter what security we’re talking about, you know that a lot is priced in,” Mr. Rosenberg said.
He wouldn’t be surprised to see gold trade within a tight range over the next 12 months, suggesting that investors need not be in any big rush to join the rally. Over the longer term, though, he expects gold’s new shine can endure well beyond Mr. Trump’s penchant for chaos.