Gold prices have surged this year, but the rally remains rooted in real demand, not hype — and could still have room to run, according to Goldman Sachs.
Gold, a haven asset, has climbed about 65% in 2025 — putting it on track for its strongest rally since 1979 — thanks to a mix of economic and geopolitical fears.
On Thursday, the yellow metal hit a record high for the fourth straight session, soaring past $4,300 an ounce, according to LSEG data.
While the eyegrabbing gains have drawn concerns about speculation, Goldman Sachs research analyst Lina Thomas said Thursday video that “the rally remains grounded in fundamentals, not frenzy” for now.
“In reality, the move isn’t that unusual. Central banks are still buying record amounts of gold, and private investors are simply catching up as the Fed cuts rates,” said Thomas.
“So after years of under-allocation, this is more normalization than mania,” she added.
Earlier this month, Goldman Sachs raised its December 2026 gold forecast to $4,900 per ounce from $4,300, citing strong inflows into Western gold ETFs and central bank demand.
However, Thomas said there could still be a “significant upside” ahead, citing the 1970s gold rush as a historical parallel.
Lessons from the 1970s gold rush: fear moves fast
In the 1970s, gold prices surged following President Richard Nixon’s decision to end the Bretton Woods fixed exchange-rate monetary system, which had pegged the dollar to gold.
Once the yellow metal floated freely, the price rose dramatically due to market volatility, driven by soaring inflation, the oil crisis, and geopolitical fears tied to the Vietnam War and the Cold War.
“Back then, fiscal concerns and policy uncertainty led private investors to seek a store of value outside the system,” Thomas said.
“If those fears were to crop up again, we could see the global trend toward diversification intensify,” she said.
This is particularly because the gold market is small compared with Treasurys or equities, which means prices can move fast.
Billionaire investor Ray Dalio has drawn similar parallels.
Speaking at an economic forum earlier this month, the Bridgewater Associates founder said gold’s price surge alongside the stock market rally now mirrors the situation in the 1970s.
Dalio said investors should consider allocating up to 15% of their portfolios to gold, calling it “one asset that does very well when the typical parts of your portfolio go down.”
On Tuesday, JPMorgan Chase CEO Jamie Dimon said now is one of the few times in his life when it’s been “semi-rational” for investors to hold some gold.
