As you likely know, gold reached a new intraday high last Friday, surpassing the previous high of $3,500 reached in April and topping out at $3,534 (continuous contract) per ounce.
The new high came on news that imports of gold bars would be subject to tariffs. Shortly thereafter, however, the White House characterized the report as “misinformation,” with President Trump confirming on Monday via Truth Social that “gold will not be tariffed.”
By Wednesday of this week, gold had retreated about $130 from its latest record high. But that means the metal nevertheless remains relatively close to its highest-ever price.
That resilience is worth a closer look. Since the beginning of 2022, the price of gold has climbed roughly 85%; since January of 2024, gold has achieved new all-time highs nearly 70 separate times…a remarkable record of achievement. But what makes it even more noteworthy is that gold’s powerful push higher in recent years has come amid circumstances universally considered to be adversarial to the metal’s success.
Among the most prominent of those circumstances is the sharp rise in interest rates during 2022 and 2023, as well as the persistence of those higher rates to this day.
Gold Couldn’t Be Contained by the Fastest Cycle of Rate Hikes in 40 Years
Over a strikingly short span of time…from March 2022 through July 2023…the Federal Reserve raised the benchmark federal funds rate 11 times and by 525 basis points in its effort to rein in runaway price pressures. The explicit increase in nominal interest rates combined with the rates of inflation over this period resulted in an overall increase in real rates over this period, as well – an increase that has remained largely intact to this day.
Despite this increase, however, rate-sensitive gold has managed to rise significantly over the last three years, as I mentioned just a minute ago.
But this epic surge by gold has taken place in the company of not only the fastest nominal rate increase in four decades…but also the record-breaking momentum demonstrated recently by equities.
Record Stocks? Gold Has Outperformed All Major U.S. Indexes So Far in 2025
Typically, periods that see risk assets characterized by great strength are oftentimes hostile to gold. There’s no great mystery as to why; when investors are confident in the near-term growth potential of the economy and financial markets, risk-off assets such as gold tend to fall in disfavor.
Yet during this most recent wave of strength among equities, gold has managed to remain exceptionally resilient, largely holding on to all of the gains it’s made during this metals bull market even as it has been outperformed by the three major U.S. indexes over the past few months.
Indeed, despite a recent surge that has seen the S&P 500 and Nasdaq Composite achieve new all-time highs, gold’s 28% rise since the beginning of January still far outdistances the increases logged so far this year by the S&P and Nasdaq as well as the Dow Jones Industrial Average.
So, what gives? How has gold managed to keep its strength despite the onslaught of rate- and market-based Kryptonite?
Uncertainty: The Biggest and Baddest Influence Over Gold Right Now
Simple. In a nutshell, the impact of traditional gold headwinds like higher rates and surging markets is being more than offset by a traditional gold tailwind that’s blown with great strength over the last several years: substantial economic, fiscal and geopolitical uncertainty.
It’s an uncertainty fueled by a multitude of drivers, including:
- an ever-worsening U.S. fiscal trajectory;
- ongoing deglobalization trends expected to generate an array of consequences, including higher structural inflation on a global scale and a lasting uptick in international tensions;
- America’s continued and aggressive use of dollar-based economic sanctions;
- continued related efforts at de-dollarization by many of the world’s central banks;
- and an anticipated increase in social and political unrest around the world.
The list could be a good deal longer – but you get the picture.
It’s not really the case, then, that there’s been a paradigm shift in the way gold reacts to higher rates and robust markets; those conditions always will tend to act as hinderances to gold. But remember that gold is subject to being moved in one direction or another by multiple influences. Each of the headwinds and tailwinds discussed here is every bit as relevant to gold today as it’s ever been. It’s just that comprehensive and multifaceted uncertainty has proved to be such an acutely strong driver of gold in recent years that the metal’s properties as a safe–haven asset have been more vigorously energized than its properties as a monetary asset (such as rate sensitivity).
The safe-haven properties of gold that have provided the metal with so much energy are expected to remain highly optimized as worrisome uncertainty continues to be a central feature of the global order. Should that projection, in fact, be realized, the investment terrain is likely to remain fertile for gold through at least the foreseeable future.
This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.
The Gold Strategist 