Gold is more expensive than $4,000 an ounce. Why have its records become a concern for Wall Street?

On October 8, the spot price of gold rose above $4000 per troy ounce and consolidated at this level for the first time: the price added about 1.4% and reached $4040, follows from Bloomberg data. The sharp rise in the precious metal's value - about half since the beginning of 2025 - has caused skepticism among some stock market veterans. However, investors have so far ignored the warnings.

The rise in the price of gold is due to a complex of factors, including lower interest rates, continued political and economic uncertainty, active purchases by central banks, the inflow of funds into gold-backed exchange-traded funds (ETFs) and the weakening dollar, writes Reuters. Additional impetus to the gold rally is given by the so-called "fear of missing out" (FOMO) in investors, the agency noted with reference to analysts.

Gold has become one of the most lucrative assets in 2025, with its spot price up 53% since January - almost double that of the whole of 2024. There is so much faith in this investment that the next price target will be the round figure of $5,000, Tim Wong, an independent metals trader, told Reuters.

Gold's rally in 2025 is unusual in that it is not driven by financial market turmoil, The Wall Street Journal noted. So far this year's price dynamics are stronger than in the first year of the coronavirus pandemic and during the 2007-2008 recession, and second only to the inflationary shock of 1979, the newspaper added.

Despite the market's optimism, the investment gurus' speeches began to sound alarming notes.

Citadel founder and head Ken Griffin is "seriously concerned" that faith in U.S. institutions and the dollar is waning and that investors are beginning to see gold as a safer asset than the U.S. currency. "We're seeing a significant increase in the value of assets outside the dollar," Griffin told Bloomberg, characterizing the U.S. economy as being "in an artificial upswing."

Billionaire Ray Dalio, founder of Bridgewater Associates, agreed with Griffin that investors are increasingly favoring gold over the dollar. But Dalio said investors should allocate up to 15% of their portfolios to gold. He compared the current state of stock markets to the early 1970s, when high debt levels and monetary uncertainty undermined confidence in securities and fiat currencies.

"Gold is very good for portfolio diversification. If you look just from a strategic asset allocation perspective, it's worth keeping about 15% of your portfolio in gold ... because it's the kind of asset that does very well when the typical parts of the portfolio go down," Dalio told CNBC at the Connecticut Economic Forum.

Dalio's advice differs from typical recommendations from financial advisers, who advise clients to hold mostly stocks and bonds, and allocate a small portion of the portfolio to gold and other exchange-traded commodities that don't earn interest income, CNBC noted.

A well-known skeptic of gold is the legendary founder of Berkshire Hathaway Warren Buffett. In one of his annual letters to shareholders, the "Oracle of Omaha" called gold a "sterile asset" (sterile asset). He stated that he himself prefers "investing in productive assets, be they businesses, [agricultural] farms or real estate".

A new impetus for gold prices could come from further rate cuts by the U.S. Federal Reserve, Barron's wrote. Gold does not yield interest, so as borrowing costs fall, it becomes more attractive than other safe havens such as bonds or deposit accounts, the publication explained.

Goldman Sachs on October 6 raised its forecast for the gold price by December 2026: it now expects it to be $4900 an ounce instead of $4300.

This article was AI-translated and verified by a human editor