Gold surged past $4,300 per ounce this week, setting fresh records as investors turned decisively to safe-haven assets amid mounting geopolitical strain and expectations of forthcoming U. S. rate cuts. The run has intensified scrutiny over gold’s role in modern portfolios—and reopened questions about the value of what critics label a “sterile” asset.
Spot gold climbed about 2.5 per cent to $4,316.99, while December futures peaked at $4,335, driven by escalating tensions between Washington and Beijing alongside persistent uncertainty over the Federal Reserve’s policy direction. Central banks and institutional buyers have also remained active in the market, adding upward momentum to prices.
The 2025 performance of gold is striking. The metal has rallied more than 60 per cent year-to-date, outperforming most asset classes and compelling major banks to elevate their price forecasts. HSBC now sees an average of $3,355 per ounce for 2025, up from prior estimates, while Goldman Sachs has pegged year-end 2026 targets as high as $4,900. JPMorgan, once sceptical, has joined the chorus, projecting prices between $4,500 and $5,000 under certain scenarios.
Analysts attribute this rally to a confluence of forces: aggressive central bank accumulation, a weakening U. S. dollar, capital flows into gold ETFs, and safe-haven demand spurred by global instability. Goldman Sachs emphasises that today’s surge is anchored in “real demand” rather than speculative excess, pointing to sustained inflows from both sovereign holders and private investors.
Yet veteran critics of gold remain vocal. Warren Buffett has long asserted that the metal yields nothing, repeatedly describing it as unproductive. He once quipped that owning an ounce for eternity leaves you with exactly that—one ounce—and nothing more. He argues that investment should favour productive assets that generate returns through business activity or dividends.
Supporters of gold counter this view by emphasising its role in risk management and as a portfolio diversifier. Legendary investor Ray Dalio has urged investors to replace portions of U. S. Treasury exposure with gold, warning of the risks tied to mounting federal debt and the erosion of confidence in fiat currencies. His fund, Bridgewater Associates, has significantly increased its holdings in gold ETFs.
Perspectives diverge sharply over gold’s structural limits. Detractors stress that gold does not produce income and suffers from storage and insurance costs. Proponents argue that its scarcity and strategic desirability by governments and central banks make it an effective hedge against monetary and currency risks.
One unresolved debate centres on whether central bank purchases remain a tailwind or risk becoming saturated. Some analysts suggest that if gold ownership becomes too crowded, marginal buyers may retreat. Others view central bank demand as a structural backbone for price support, especially in a world increasingly wary of overexposure to U. S. dollar assets.
Financial engineering may offer a partial bridge. Gold lease markets and tokenised gold bonds have emerged, allowing holders to earn yield on gold holdings by lending or via blockchain-based instruments. These innovations seek to counter gold’s reputation as a cost-dragging store of value by adding yield-like features.