Gold is continuing its historic winning streak and has set another all-time high on Wednesday as investors bid up bullion. The move reflects what some on Wall Street are calling the “debasement trade,” or a push into gold, cryptocurrency, and other alternative assets as protection against rising government debt and a weaker dollar.
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Gold, which is having its best year since 1979, is rising alongside the stock market, a move that defies the precious metal’s usual role as a safe-haven asset. “You’ve got the S&P 500 pricing in an AI supernova, and you’ve got the gold camp saying ‘We’re going to have structural deficits, we have fiscal pressure in the U.S., and I need to manage that risk’,” said Vanguard Group chief economist Joe Davis.
Gold Benefits from a Weaker Dollar and Lower Rates
The ICE U.S. Dollar Index had its worst six-month performance in 50 years during the first half of 2025 and has remained range-bound since then. Each unit of gold increases in dollar value when the currency falls. Despite a stabilizing dollar, gold has continued to soar.
A lower federal funds rate also bolsters the case for gold, as the metal doesn’t pay out interest. In other words, the opportunity cost of holding gold compared to interest-bearing assets decreases with lower rates.
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