Gold has stood out as a top performer this year, delivering meaningful profitability relative to stocks, bonds, and real estate. Gold futures have touched record highs and posted solid monthly gains in USD terms, while returns in local currencies benefited from exchange-rate moves, especially when the domestic currency weakened against the dollar. This lot of strength underscores gold’s role in a diversified portfolio, a point echoed by the World Gold Council.
Still, such results are not the rule. They are exceptions driven by several factors, with geopolitics playing a key part in recent demand for the metal.
Hedging demand remains robust among individuals, institutions, and central banks alike. In the 2022-2024 period central banks increased their bullion holdings, with notable purchases from developing economies such as India, Türkiye, China, and Russia. The pattern of substantial annual acquisitions may extend beyond those years, a trend highlighted by the World Gold Council.
The monetary policy landscape also shaped prices. In the recent cycle the US Federal Reserve moved toward a looser stance as inflation cooled, signaling progress toward the inflation goal and providing support for gold prices.
A third driver is the slower growth in gold mine production. Supply in the market often lags behind rising demand, because gold mining remains capital-intensive and inflation pushes costs higher, making new projects prudent and measured.
Taken together, these forces are likely to keep gold at elevated levels, though investors should not expect the same dramatic gains seen in the prior year. The market appears largely balanced between supply and demand, reducing the chance of outsized moves in the near term.
Over the long run, gold has served as an inflation hedge and a stabilizing element for portfolios. A typical advisor’s guidance suggests allocating a portion of a portfolio to gold, commonly in the range of roughly 8 to 12 percent, depending on goals, time horizon, and risk tolerance.
Globally, there are several accessible ways to gain exposure to gold. Physical gold such as bars and coins remains an option, though liquidity and storage costs can be drawbacks. An impersonal metal account offers a bank-backed way to hold bullion, while gold futures provide a vehicle for price speculation and hedging. Gold exchanges and futures markets, and in many places in North America gold-backed exchange-traded funds, enable convenient access without holding physical metal. Investors can also consider shares of gold mining companies, which can amplify gains when gold prices rise, albeit with equity risk. A leading mining company in the sector often attracts attention for its risk-adjusted potential and growth profile, illustrating how mining equities can complement other gold exposures.