Though they fluctuate in intensity, the drivers of gold demand in recent quarters—including monetary policy uncertainty, questions about Federal Reserve independence, disruptive trade policy, shifting fiscal policies, heightened local and geopolitical tensions, and high sovereign debt levels—remain intact. The gold spot price climbed 11.9% in the fourth quarter to bring its 2025 gain to nearly 65%, the largest annual advance since 1979. The FTSE Gold Mines Index has been even stronger, which is not surprising given that the stocks of miners historically have been leveraged to the price of gold; its 14.6% climb during the quarter brought the index’s annual return to nearly 170%.¹

Another Quarter, Another Series of Records

The 43-day US government shutdown that began on October 1—the longest in history—set the tone for gold demand in the fourth quarter, highlighting the value of a potential “safe haven” asset amid the elevated fiscal and political risks facing the country. Further, the shuttering of numerous federal agencies responsible for producing economic data left investors uncertain about the Federal Reserve’s next policy move after its September rate cut. Despite limited access to official data, the Fed announced another cut following its October meeting, though Chair Powell tempered expectations for what had been a widely expected December cut and motivated some profit taking by gold investors in the process.

Eventually, the slow release of economic data that followed the return to work by federal employees in mid-November suggested that the Fed’s inflation concerns were likely to take a back seat to slowing economic momentum and a weakening labor and led to renewed confidence in a December rate cut. Both the US dollar and real yields moved lower, while gold recovered from its small swoon.² Indeed, the central bank on December 10 cut the federal funds rate another 25 basis points to a range of 3.50–3.75%. Notably, there were three dissents—the most in six years—as two voters favored no cuts, while one voter favored a 50 basis point cut, though the dot plot of rate projections indicated broader “soft” dissent among the 19 officials.³ With the rate near neutral, we believe the Fed is well positioned to wait and see how the economy evolves as data reporting impacted by the government shutdown catches up and fiscal stimulus kicks in during the first quarter.

Meanwhile, demand for gold remains strong. Central banks have continued to diversify their reserves in an effort to hedge financial and geopolitical risks, providing further support to the gold price. Central bank purchases through the end of third quarter amounted to about 630 tonnes, off the pace of the past three years but well above pre-2022 averages.⁴ And there may be more to central bank buying than meets the eye, and there has been speculation that demand is understated. The World Gold Council (WGC), for example, relies on trade statistics and field research to supplement data voluntarily reported to the International Monetary Fund, which has been trending lower. It’s estimated that only one-third of central bank buying was publicly reported, down from about 90% four years ago; a recent article in the Financial Times suggested that China’s unreported gold purchases could be 10 times its reported total, or as much as 250 tonnes—or one-third of global demand—in 2025 alone.⁵

Far easier to track is demand for physically backed gold exchange traded funds (ETFs), and this measure of investment demand from both institutional and individual investors has been quite strong. Inflows in 2025 amounted to $89 billion, the largest on record, compared to $4 billion in 2024. Continued demand from these buyers could serve as an ongoing source of support for the gold price.⁶ A more novel, incremental source of gold demand has come from Tether, the world’s largest stablecoin issuer. Headquartered in digital-asset friendly El Salvador, the stablecoin company backing USDT has accumulated nearly 116 tonnes of gold—50 tonnes of which was bought in second and third quarter 2025—putting it on even footing with smaller central banks.⁷

Strategic Exposure in an Uncertain Environment

There are a number of factors that could inhibit gold’s rally in the near term, but we continue to view the potential for recession as the key risk. The onset of recession could have negative implications for the price of gold in the short term even though recessions historically have been positive for gold over the medium to long terms. We saw this during the brief but sharp Covid-related recession in 2020 as well as 2008–09 recession associated with the global financial crisis. In both instances, however, gold’s value as a potential hedge against adverse events ultimately reasserted itself after an initial period of price weakness.

Independent of fluctuations in economic activity, we believe consistent, strategic gold exposure is critical for diversified portfolios seeking to avoid the permanent impairment of capital and to maximize risk-adjusted returns across cycles.