Gold broke a new record on Tuesday, cresting at over $4,000 per troy ounce. It was sitting at $4,055.30 Wednesday morning on Comex’s continuous contract index. It’s up more than 50% for the year.
At first glance, this makes no sense. Gold is traditionally a safe-haven asset that investors run to when times get tough. But U.S. GDP growth is robust, unemployment is low, and the S&P 500 is posting daily record highs. All of that looks like the best of times, not the worst of times.
So why is gold going through the roof?
Several factors are pushing the price higher:
“The latest leg higher has been underpinned by the growing uncertainty over the U.S. government shutdown and fear-of-missing-out flows into physical gold ETFs. Of course, a macro backdrop consisting of a weaker dollar, the resumption of the rate-cutting cycle, U.S. deficit concerns, tariff-related inflation angst, and steady foreign central bank buying have also supported the yellow metal’s 50% rally this year,” Adam Turnquist of LPL Financial in Charlotte, N.C., said in a note seen by Fortune.
A lot of investors worry that the growth in tech stocks fueled by spending on AI will end badly, according to Macquarie’s Thierry Wizman. “It seems paradoxical that a hope-based AI-tech rally should take place simultaneously with a rally in gold. But gold’s rally is the collective ‘hedge’ against the prospective failure of the U.S.’s AI-driven tech boom to deliver on its high-productivity, high-growth promises, or to justify the vast investment needed to support those promises,” he wrote in a research note.
But don’t expect stocks to tumble any time soon. The Fed may deliver back-to-back interest rate cuts this year, Daco says—and that will likely be cheered by stock investors.
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
