Gold Prices Reach Historic Highs Amid Strong Investor Demand

On Monday, the price of gold (GC=F) surged to unprecedented levels, marking a significant milestone as it gears up for its largest annual increase in over 45 years.

Gold futures skyrocketed to approximately $3,750, while immediate delivery bullion was trading at above $3,700 per ounce.

Year-to-date, the precious metal has seen an impressive rise of over 40%, representing its best performance since 1979, as reported by Carson Group research.

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The remarkable increase in gold prices this year has been fueled by anticipations of easing monetary policies from the Federal Reserve. This trend started last week when policymakers reduced interest rates by 25 basis points and indicated potential further cuts in 2025.

Additionally, a decrease in the value of the US dollar, which gold is priced against, has contributed to the metal’s price increase. The dollar index (DX-Y.NYB) has declined approximately 10% this year.

Inflows into physically backed exchange-traded funds (ETFs) have hit a three-year peak, while central bank gold purchases continue to rise.

According to John Stoltzfus, chief investment strategist at Oppenheimer, “Central banks worldwide, particularly in emerging markets like Russia, China, and India, are increasingly buying gold to hedge their currencies against the dollar. These purchases are significant.”

Gold has surpassed the performance of both the S&P 500 (^GSPC) and bitcoin (BTC-USD), rising 13% and 20%, respectively, over the same period.

A recent Bank of America fund manager survey revealed that gold is now ranked as the second most crowded trade, falling just behind the “Magnificent Seven” technology stocks.

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Still, when queried about their allocation to gold, nearly 39% of surveyed fund managers reported that their current exposure is nearly zero, with the average allocation sitting at just 2.3%.

Earlier in the month, analysts at Goldman Sachs observed that gold’s breakout is indicative of “conviction buyers stepping up their purchases,” which include increased ETF holdings, stronger speculative positioning, and reaccelerating demand from central banks following a seasonal lull in summer transactions.

The firm has maintained a price target of $4,000 per troy ounce by mid-2026.

Gold futures are up over 40% year-to-date, marking their best year since 1979, according to research compiled by Carson Group. (Photo by Matt Hunt/NurPhoto via Getty Images) — Gold futures are up over 40% year-to-date, indicating their strongest performance since 1979. (Image Credit: Matt Hunt/NurPhoto via Getty Images) · NurPhoto via Getty Images

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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