27 October 2025 3 minute read
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This month’s chart looks at the strong performance of gold compared to equities so far in 2025. Has it gone too far, or does it still hold value?

Gold has been the standout asset of 2025. Its price has risen by more than 55 per cent year-to-date, reaching record highs above US$4,380 per ounce in October. This marks its best annual performance since 1979.

As Figure 1 shows, this extraordinary rally has left global shares (equities) in its wake: they are up by around 18 per cent so far in 2025.1

Figure 1: Gold versus global equities in 2025 (US$)

Past performance is not a reliable indicator of future performance. For illustrative purposes only.

Source: Aviva Investors, Bloomberg. Data as of October 21, 2025.

Possible reasons for gold’s recent run:

  • Macroeconomic backdrop: Governments’ surging debt levels and high spending, especially in the US, have raised concerns about financial instability and the long-term effect on currencies’ values. Investors are increasingly using gold as a hedge against these risks.
  • Central bank demand: Central banks, particularly in developing economies, have been aggressively buying gold to diversify away from the US dollar. Central banks now account for a third of monthly global gold demand, the highest level since records began.2
  • Investor flows: Both retail and institutional investors have significantly increased their gold holdings. Gold-backed exchange traded funds (ETFs) saw record inflows of $26 billion in the third quarter of 2025, reflecting strong investor appetite.3

Are gold and equities becoming correlated?

Equities have trailed behind, but they too have been on the rise since the start of the year. Traditionally, gold and equities are unconnected, with gold performing best during periods of turmoil and equities during periods of growth. So why have they started moving in sync? Here are three possible reasons:

  1. Global liquidity: Massive amounts of money have been pumped into the economy along with other stimulus measures, and these have boosted investors’ appetite for risk across all asset classes. US households now hold $7.5 trillion in money market funds – $1.5 trillion above the long-term trend. This means a lot of capital is available for investing in both gold and equities.
  2. Access to markets: The popularity of trading apps and easy ways to invest have enabled more investors to participate in both markets.
  3. Hyper-financialisation: This parallel rally of gold and equities may signal a period of “hyper-financialisation”. This means high confidence and easy access are driving booms in multiple asset classes at the same time, making them perform differently in relation to each other, compared to how they have in the past.

Fool’s gold?

While the gold rally has been extraordinary, it has not been plain sailing. On October 21, 2025, gold saw its largest single-day drop since 2020. It fell by over five per cent in one day, to below $4,100 per ounce.

The recent volatility shouldn’t be ignored

This suggests some steam may be coming out of the rally after such a rapid rise. Nevertheless, gold remains up by around five per cent so far in October, and over 55 per cent for the year.

The recent volatility – and the risk of a significant short-term drop – shouldn’t be ignored. But the long-term drivers underpinning gold remain robust. Gold continues to act as a critical “safe haven” and inflation hedge, especially as central banks and investors seek protection from macroeconomic risks.

References

  1. Unless stated otherwise, the source of all data in this article is Bloomberg, as of October 22, 2025. Global equities are represented by the MSCI All-Country World Index in USD.
  2. Ruchir Sharma, “What strong gold says about the weak dollar”, Financial Times, April 23, 2023.
  3. “Gold ETFs, holdings and flows”, World Gold Council, October 22, 2025.

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