Key Takeaways
Gold has surged 39% in 2025, its strongest annual rally since 1979.
U.S. gold ETFs have seen net assets jump 43% year-to-date, fueled by Western investors.
Hedge funds now hold nearly half of their commodity exposure in gold as Fed rate cuts loom.
Gold prices are on track for their biggest yearly increase in more than four decades, according to new data from Dow Jones Market Data. Futures have climbed 39% year-to-date, the steepest rise since 1979, when the global energy crisis and runaway inflation sent the yellow metal to record highs.
While gold’s latest rally began nearly three years ago on the back of heavy central bank and Chinese buying, 2025’s surge has been largely powered by Western investors piling into exchange-traded funds (ETFs).
Data from Morningstar shows that net assets in U.S. gold-backed ETFs have risen 43% since January, highlighting a wave of institutional and retail demand.
Macro Drivers: Fed Cuts and Inflation Fears
Gold’s climb accelerated in August after Federal Reserve Chair Jerome Powell hinted at interest rate cuts, expected at the central bank’s upcoming meeting.
The shift has cemented gold’s role as a hedge against inflation and monetary easing. According to Ole Hansen, head of commodity strategy at Saxo Bank, 47% of hedge funds’ net commodity holdings were in gold as of early September, underscoring the scale of investor conviction.
Historical Context: Strongest Since the Energy Crisis Era
The last time gold saw such dramatic gains was in 1979, during the second oil shock and a period of runaway inflation. That episode sent gold into a multi-year super rally that redefined its role as a global safe-haven asset.
Today’s environment of geopolitical uncertainty, rising government debt, and central bank accumulation is fueling comparisons to that era, with some analysts suggesting gold may be entering another long-term secular bull market.