For centuries, gold has been a standard for value. It’s used for jewelry and as a medium of exchange. Gold is also useful in manufacturing and is seen as a store of value.
It’s no real surprise that gold prices have risen over the last few decades. In fact, gold’s price increase has significantly outpaced the growth of the S&P 500 in 2025. The precious metal’s tremendous price change has caused some people to wonder what is behind gold’s current bull market.
How much did gold prices rise in 2025?
The price of the S&P 500 — the index that tracks the performance of 500 leading companies in the U.S. — increased nearly 18% in 2025. And while that’s impressive, gold’s performance far outpaced the benchmark index. At the beginning of 2025, the price of gold was $2,624. By December 31, it was $4,325 — an increase of more than 60%.
As of February 25, 2026, gold is valued at $5,199 per troy ounce, having reached an all-time high of $5,602 on January 28.
Experts have long viewed gold as an attractive long-term investment since it is typically uncorrelated with the stock market, is a hedge against inflation and serves as a safe-haven asset in times of economic or geopolitical unrest.
However, though gold’s price has increased steadily over the past few decades, its price skyrocketing last year was unusual.
Why is the price of gold so high?
Although gold’s price reached record highs just this year, there’s no sign that its growth will slow. In fact, some experts believe that its astronomical climb will continue, reaching past the $6,000 mark by 2027.
But, what’s driving this upward trend?
Central bank reserves
Central banks in emerging markets have been buying more gold. Countries like China, Poland, Turkey and India have been stocking up on gold as part of broader efforts to diversify away from the U.S. dollar and reduce exposure to potential sanctions or geopolitical shocks.
This demand for the precious metal in regions where it has traditionally represented a lower percentage of reserves has helped stoke prices.
Increased retail demand
Like other assets, gold responds to demand. And it’s not just central banks. Costco started selling one-ounce gold bars in 2023, and the company has seen inventories depleted. Analysis from the World Gold Council indicates that Costco’s sales have impacted demand and could be impacting the price of gold, as well.
In China, gold beans are all the rage, with young adults buying them in droves. When people feel like they have easy access to gold through a retailer like Costco or a local store, it can increase demand, driving up prices.
Federal Reserve rate cuts
There has been the expectation that gold will be in even greater demand as the Federal Reserve cuts interest rates. Some of that concerns the theory that while rates were high, money flowed into assets with higher yields.
Gold doesn’t produce yield. So as interest rates fall, some expect money to flow into gold. Demand for gold ETFs is especially expected by some analysts, like those at Goldman Sachs.
Concerns about U.S. debt and politics
Gold prices are usually expressed in dollars and often move inversely to the value of the U.S. currency. Investors have expressed caution about the economic future of the U.S., with ongoing concerns about recessions or President-elect Trump’s agenda, specifically regarding tariffs, driving worries.
Those concerned about the U.S. economy tend to invest in gold because its price usually remains steady during market fluctuations. Gold is often considered a stable way to invest in a tangible asset, so it becomes popular in times of uncertainty.
Should you invest in gold?
With gold near record highs, some investors are trying to decide if now is the time to buy. Whether or not you invest in gold has less to do with trying to time the market and more to do with your individual portfolio strategy and goals.
For some, gold can add a layer of diversity to a portfolio. After all, the precious metal tends to hold its value during economic uncertainty and market volatility. However, before deciding to move forward, it’s important to consider the following:
- Storage and insurance: If you buy physical gold, you need a safe place to store it. You can do that on your own property, at a bank or by using a company. Depending on your choice, you might have to pay fees for storage, as well as insurance, to protect against theft.
- Purity: Not all gold is considered investment grade. Make sure you purchase your gold from a reputable dealer. Additionally, understand which gold is considered legal tender if you expect your gold to be used as a medium of exchange.
- Your goals: What are your objectives in investing in gold? It’s not usually considered a way to make a quick buck, but rather to diversify your portfolio and potentially hedge against inflation. Be clear about your goals and how much of your portfolio should be dedicated to gold.
Bottom line
Gold is generally seen as a long-term store of value and a safe-haven asset when times get tough. However, like other assets, several factors affect its price. In 2025, demand was driven by central bank-buying and elevated retail interest. Other factors, like economic concerns, might drive the price higher in the future.
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