Gold is up more than 40% in 2025, on pace for its best year since 1979

Core Insights - Gold prices have reached a new record, positioning the metal for its largest annual gain in over 45 years [1] - Gold futures surged to approximately $3,750, while immediate delivery bullion traded above $3,700 per ounce [2] Year-to-Date Performance - Gold is up more than 40% year-to-date, marking its best performance since 1979, driven by expectations of a Federal Reserve easing cycle and recent interest rate cuts [3][9] - The dollar index has decreased roughly 10% year-to-date, contributing to gold's rise as it is priced in US currency [4] Market Dynamics - Inflows into physically backed exchange-traded funds (ETFs) have reached a three-year high, with central banks continuing to accumulate gold [4] - Central banks, particularly in emerging markets like Russia, China, and India, are buying gold in significant quantities to hedge against currency fluctuations [5] Fund Manager Sentiment - A recent Bank of America survey indicated that gold is now the second most crowded trade, following the 'Magnificent 7' stocks, yet 39% of fund managers reported minimal allocation to gold [6] - The average allocation among surveyed fund managers was only 2.3% [6] Analyst Perspectives - Goldman Sachs analysts noted that gold's breakout is driven by conviction buyers, including increased ETF holdings and renewed demand from central banks after a seasonal lull [7] - Goldman Sachs has set a price target of $4,000 per troy ounce for gold by mid-2026 [8]