"The perfect investment at the perfect time": has the gold market bubble inflated?

Gold may be showing signs of forming a price bubble - on September 22, its price hit a record for the 36th time since the beginning of 2025, MarketWatch writes. However, not all Wall Street economists are convinced that the precious metal's rally has gone too far.

The price of gold has been rising since mid-2023 as many investors consider gold "the perfect investment at the perfect time" - it benefits from fears and uncertainties related to inflation, currency devaluation, debt risks, socioeconomic tensions and geopolitical conflicts, MarketWatch quoted Winhall Risk Analytics analyst and OptionMetrics contributor Brett Friedman as saying.

Friedman noted that gold is ideal for those looking for "catastrophe insurance." Interest in the metal is high, and "this is to be expected given its impressive price performance" over the past few years, he said. However, this in itself "does not necessarily indicate that there is or even a bubble forming in the market," the economist emphasized.

While financial bubbles are extremely difficult to define because they tend to become apparent only in hindsight, from an options perspective the market "is not exhibiting the highly volatile and febrile behavior characteristic of a true bubble," Friedman argues. "Rather, gold is in an aggressive and sustained bull market phase," he wrote.

According to Adrian Ash, Director of Research at BullionVault, gold and silver's growth drivers continue to take shape amid a "perfect storm." "Against a backdrop of worsening domestic strife and political violence in America, the [U.S. Fed] interest rate cut is now coupled with escalation between NATO and Russia, increasing the appeal of gold and silver as protective assets," he said. This has been fueled by a breakdown in Western unity on "issues ranging from the war in Gaza to attitudes toward China's global ambitions."

Teucrium Managing Director and Portfolio Manager Jake Hanley noted that from a technical analysis perspective, gold has been in a "healthy bullish trend" since September 1, which is "supported by growing caution about inflation as well as geopolitical concerns." He drew attention to the lack of news that could have triggered a rise in gold prices earlier this week.

In 2025, gold rose in price by more than 40%, demonstrating the best dynamics for the last 45 years. On September 22, futures for the precious metal jumped to $3750, and bullion prices jumped above $3700 per troy ounce.

Capital inflow into exchange-traded funds (ETFs), backed by physical gold, reached a three-year high, while central banks continued to increase their reserves. Weakening of the dollar, in which gold prices are denominated, contributed to the growth of quotations, notes Yahoo Finance. The dollar index, reflecting its rate against a basket of world currencies, has lost about 10% since the beginning of 2025.

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