Gold’s biggest rally since the 1970s is being stoked by “gold-plated Fomo”, as investors fearful of missing out on returns and worried about inflation add the precious metal to their portfolios.
The bullion price has rocketed nearly 50 per cent this year to a record high above $3,800 per troy ounce after US President Donald Trump’s trade war sparked a rush to haven assets and sent the dollar tumbling.
But even when tariff-induced volatility in financial markets receded over the summer, the gold price accelerated, with a near-12 per cent jump in September alone marking the biggest monthly gain since 2011.
A key catalyst, say asset managers, has been a wider range of investors jumping on the bandwagon of soaring prices after years of record buying by central bank reserve managers.
“It’s gold-plated Fomo,” said Luca Paolini, chief strategist at Pictet Asset Management, referring to a “fear of missing out” that is also seen as fuelling huge gains in megacap technology stocks and other markets such as credit.
“Gold has become so big . . . that you cannot ignore it. There becomes a level when it becomes impossible not to own it.”
The market has gone “a bit berserk”, said Nicky Shiels, an analyst at trading firm and precious metals refinery MKS Pamp, adding that the “game-changing driver” has been inflows into exchange traded funds, a cheap and popular investment vehicle used by both retail and institutional investors.
Net inflows into gold-backed ETFs surged to $13.6bn over the past four weeks, according to World Gold Council data, meaning that more than $60bn net has flowed in so far in 2025, a record for a calendar year.
The amount of gold held by these ETFs has risen above 3,800 tonnes, close to its peak during the Covid-19 pandemic sell-off in risky assets.
Behind this recent price surge — the biggest since the 1979 oil price shock — is the first signs of a shift among investors, from individuals to pension funds, to make a long-term allocation to precious metals, in the same way that they would do for equities and bonds, say analysts.
Instead of the traditional 60/40 asset allocation to equities and bonds, Morgan Stanley has suggested a 60/20/20 split, where gold has an equal weight with fixed income.
Such a shift could mean trillions of dollars pouring into bullion and mark a major change from the 2 per cent that fund managers currently allocate to gold, according to a recent Bank of America survey.
“For the first time in a long time” there has been a significant number of enquiries from clients exploring taking a long-term holding in gold, said Michael Widmer, head of metals research at BofA.
Some clients, said Valérie Noël, head of trading at Swiss private bank Syz Group, are keen on trades where they bet against the dollar while buying gold.
“People are looking to short the dollar, but they are not quite sure what currency to purchase — that uncertainty leads you straight to gold,” said MKS Pamp’s Shiels.
Gold, which unlike bonds provides no income, has long been distrusted by some mainstream investors as hard to value or predict. Warren Buffett once referred to the yellow metal as being “neither of much use nor procreative”.
Investors poured into bullion as central banks resorted to quantitative easing in the wake of the global financial crisis. But fears of hyperinflation proved misplaced, and gold failed to surpass the high it hit in 2011 until the summer of 2020.
However, volatility in bond markets, amid concerns over record sovereign issuance across rich nations, is making fixed income less attractive as a portfolio balancing tool and adding to gold’s shine once more.
“What we have seen in bond markets has been a bit of a push factor,” said Maya Bhandari, multi-asset chief investment officer in Emea at Neuberger Berman. “Gold looks a bit more attractive as a diversifier to long equity position than bonds do.”
Another driver is the worry in some quarters that policymakers will respond to record sovereign debt levels by allowing inflation to run above target, in effect devaluing assets, especially given Trump’s pressure on the Federal Reserve to keep rates low.
The bond market, however, is not pricing in a loss of control over inflation. Instead, gold is being used as a “tail hedge” by investors, according to Francesca Fornasari, head of currency solutions at Insight Investment.
The view is “we don’t want to have [a loss of Fed independence] as our base case, but we want to have something on”, she added.
Data visualisation by Ray Douglas
