Gold is set to close 2025 as one of the best-performing assets globally, rising almost 60% year-to-date its strongest annual performance in more than 45 years, according to Farhan Badami, Market Analyst at eToro.
Although prices have eased slightly from the record highs reached in October, gold remains on firm footing as markets head into the Federal Reserve’s final meeting of the year. “Markets remain convinced that a December rate cut is coming, and the backdrop still supports that view,” said Badami.
He added that while inflation has been volatile, it has remained largely contained, and recent tariff policies have not reignited the kind of price pressures that would force the Fed to adopt a more aggressive stance. The ongoing US government shutdown has added further complexity, with policymakers forced to operate without a full flow of economic data. Still, markets appear confident, with the S&P 500 climbing around 5% since its November low, reflecting expectations that a rate cut is already priced in.
Badami noted that Federal Reserve Chair Jerome Powell faces a delicate communications challenge at this week’s meeting. “He needs to strike a balance between confidence that inflation continues to move in the right direction and reassurance that the Fed is not cutting because it fears a sharper downturn,” he said.
Throughout 2025, gold has thrived against a backdrop of safe-haven demand, persistent geopolitical tensions, and substantial central bank buying. ETF inflows have reached record highs, underscoring broad-based investor interest ranging from large institutions to younger retail investors.
Looking toward 2026, Badami believes the key question is not whether gold will maintain its safe-haven appeal, but how high prices could climb if uncertainty persists. “Central banks look set to keep accumulating bullion as they hedge against currency and inflation risks. That steady official demand remains a strong anchor for prices, and USD $5,000 is not off the table,” he said.
The macro forces that propelled gold to all-time highs in 2025 geopolitical instability, inflation pressures, and shifting US fiscal dynamics show little sign of easing, particularly with President Donald Trump’s administration contributing to global uncertainty. This environment, Badami concluded, “sets the stage for another year in which investors continue to seek comfort, stability, and protection in the world’s oldest safe haven.”
