Gold futures on Tuesday surged to a fresh high of over $3,800 as investors continue to bet big on the safe haven asset.
The real gold price, which adjusts for inflation, hit a record high earlier this month for the first time since 1980.
In a note on Monday, Deutsche Bank analysts forecast that gold prices could rise above $4,000 by the end of the year – notching a massive full-year return of more than 50%.
That would cement gold as the best-performing asset of the year.
Investors often buy gold as a hedge against inflation and economic uncertainty because of its ability to hold its value, even as other assets fall.
Yet major stock indexes have also notched record high after record high this year, as investors remain bullish about the stock market.
“Whilst gold prices have many drivers, one is the perception that it operates as a haven that investors buy in times of fear. After all, it doesn’t pay a dividend or a coupon, and over the very long term, it’s struggled to compete with other asset returns,” Henry Allen, vice president and macro strategist at Deutsche, said in a note to clients.
Anxiety around President Trump’s tariffs and their potential to cause inflation, stubbornly high interest rates, a weaker US dollar, a possible government shutdown and a slow labor market have all contributed to gold’s explosive rise this year.
Meanwhile, central bankers around the world have continued to buy up gold en masse despite record-breaking prices – likely a cautionary move linked to the Russia-Ukraine war and the war in Gaza. Central bankers typically ramp up their gold reserves during geopolitical crises.
Some 85% of central bankers said gold’s performance during tumultuous times was either highly or somewhat relevant to their gold portfolio, with 71% citing it as a hedge against geopolitical risks, according to a World Gold Council survey this year.
Some 95% of central bankers expect global gold reserves to increase this year, according to the survey.
The Federal Reserve cut interest rates earlier this month for the first time since December 2024 by a quarter point. It’s expected to issue another cut sometime this year.
A lower interest rate typically leads to lower Treasury yields. That makes gold, which doesn’t pay interest, an even more attractive asset, so gold could continue to climb this year.
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