Despite widespread misjudgments in economic outlooks, gold has emerged as a top-performing asset amid persistent inflationary pressures, outpacing major benchmarks. The asset’s resilience underscores shifting investor sentiment in a volatile macroeconomic environment.
- Gold (GLD) rose 18.4% YTD through December 6, 2025
- S&P 500 (SPX) gained only 3.2% over the same period
- 10-year U.S. Treasury yield (US10Y) ranged between 4.1% and 4.8% in 2025
- TLT declined 9.1% in 2025 as long-duration bond demand weakened
- Core PCE inflation remained at 3.6% in November 2025
- GLD recorded $7.2 billion in net inflows during Q4 2025
Amid a wave of inaccurate market forecasts, gold has delivered consistent returns in 2025, rising 18.4% year-to-date through December 6. This performance contrasts sharply with the S&P 500 (SPX), which gained only 3.2% over the same period, and the 10-year U.S. Treasury yield (US10Y), which fluctuated between 4.1% and 4.8% due to uncertainty around Federal Reserve policy. The iShares Gold Trust (GLD), a leading gold ETF, has seen net inflows of $7.2 billion in the last quarter, signaling strong demand for inflation-hedging assets. The divergence in performance reflects growing skepticism toward forward-looking economic models, particularly those projecting a near-term disinflation. While equity markets priced in aggressive rate cuts by mid-2026, inflation remains sticky—core PCE inflation held at 3.6% in November, above the Fed’s 2% target. Fixed income investors have responded by reducing exposure to long-duration bonds, evidenced by the iShares 20+ Year Treasury Bond ETF (TLT) declining 9.1% in 2025. Gold’s outperformance is rooted in its historical role as a real return anchor during periods of monetary policy uncertainty and currency devaluation. With the U.S. dollar index weakening by 4.3% since January, and global geopolitical risks escalating, gold has served as a safe haven. The metal’s price reached $2,340 per ounce in early December, marking its highest level since 2020. As real yields remain elevated and inflation expectations remain anchored above 3%, investors are increasingly reallocating capital from equities and long-term bonds into tangible assets. This strategic pivot is reshaping portfolio construction, particularly among institutional and high-net-worth clients seeking resilience in volatile environments.