Gold has experienced its strongest annual growth since 1979, significantly outpacing the US stock market amidst geopolitical instability, declining interest rates, and a weakening dollar.

Gold futures traded in New York have surged by nearly 71% year-to-date, marking the best performance in 46 years. The last time such a powerful rally occurred was during the presidency of Jimmy Carter, when the world faced an energy crisis, high inflation, and heightened tensions in the Middle East.

This year, global uncertainty has escalated once more. Tariffs reshaping international trade, the ongoing conflict between Russia and Ukraine, intermittent tensions between Israel and Iran, and US operations to detain oil tankers off the coast of Venezuela have created a challenging backdrop. In such an environment, investors traditionally flock to safe-haven assets, particularly gold.

Gold is viewed as a tool for preserving value during crises, inflation surges, and currency depreciation. According to World Gold Council senior market strategist Joe Cavatoni, uncertainty remains a defining characteristic of the global economy, making gold increasingly appealing as a strategic element for diversification and a source of stability.

One drawback of gold for some investors is its lack of fixed income, typical of bonds. However, in an environment of interest rate cuts delivered by the Federal Reserve, bond yields tend to fall, which enhances gold’s relative attractiveness.

Last week, the metal reached a historic milestone for the 50th time this year, with prices surpassing $4,500 per ounce for the first time. Moreover, analysts at JPMorgan expect gold to surpass $5,000 per ounce in 2026.

Gold’s 71% rise this year has vastly outperformed the S&P 500 index, which has added only 18%. For comparison, in 2024, gold futures gained 27%, while the S&P 500 climbed by 24%.

Expectations of further monetary policy easing by the Federal Reserve in 2026 continue to support gold prices. Additionally, the US dollar’s weakness has made gold more accessible to international investors.

High prices benefit not only jewelry companies and owners of gold ornaments but also major buyers. The increase in demand is being driven not only by individual investors acquiring bars but also by countries that are ramping up their significant gold purchases.