What’s driving the precious metal higher and higher?
Gold has been shining brightly — and capturing the attention of many investors.
Since the end of 2023, gold* is up 103% (see the chart). That compares to a 43% return for the S&P 500 and an 8.6% return for U.S. investment grade bonds**.
Economic and political uncertainty is driving investors and central banks to boost gold holdings, fueling the metal’s surge. In the U.S., the fear that inflation, tariffs, the national debt, and other factors could hurt the dollar and the economy has some investors buying gold and other non-traditional assets (such as crypto) that they expect will hold up well if stocks and bonds falter.
LBMA Gold Price Index
In fact, gold has historically offered low day-to-day correlations with stocks and bonds – although it also has its own risk factors. Some important facts to keep in mind:
- Gold is its own asset class: Gold generates no earnings or cash flows, unlike stocks, and has no default risks, unlike bonds. Its price is mainly influenced by changes in real yields, the dollar, and investor sentiment.
- Gold often zigs when stocks zag: Gold is one of the few major asset classes that has consistently exhibited a very low correlation with stocks. That means when stocks fall, the value of gold often tends to rise. This low correlation often works in reverse as well. For example, gold plummeted by roughly 45% from September 2011 through December 2015—a period during which stocks gained more than 92%.
- Gold itself isn’t as stable or steady as some investors may assume: Despite being a “safe haven” asset, the average daily volatility of gold since 2005 is around 17%—nearly as volatile as stocks (19%) during that period. Bonds, in contrast, experienced average daily volatility of just 4%.
Ultimately, gold has the potential to serve as a valuable portfolio diversification tool, but it lacks some of the characteristics that can help stocks generate long-term capital growth. Additionally, while gold and crypto are often viewed similarly as diversifiers, the two assets actually differ in meaningful ways (a topic we’ll explore in a future Big Number).
It’s also worth noting that gold’s run-up since the end of 2023 has occurred despite real, inflation-adjusted bond yields being materially positive (with the 10-year U.S. Treasury real yield currently at 1.75%, for example). Positive real yields on bonds typically make gold less attractive to investors, as gold offers no yield. We will continue to watch this dynamic to see how it evolves.
By Mike Dickson, Ph. D.
Originally published October 22, 2025
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*LBMA Gold Price Index
**Bloomberg US Aggregate Bond Index
The LBMA Gold Price benchmarks are the global benchmark prices for unallocated gold and silver delivered in London. The Bloomberg U.S. Aggregate Bond Index is a broadbased benchmark that
measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including
Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed
securities and collateralized mortgage-backed securities. The S&P 500 or Standard & Poor’s 500 Index is
a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. It is not possible to invest directly in an index. Information obtained from third party sources is believed reliable but has not been vetted by the firm or its personnel
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