The Gold Rally That’s Too Hot to Ignore
Gold’s meteoric rise has stunned markets this year — surging to a record $4,380/oz, falling sharply, then rebounding again. With prices now more than 55% higher than January, analysts are scrambling to explain the rally. And most of the usual theories don’t add up.
Institutional investors aren’t fleeing to safety, central banks aren’t buying at the scale needed to move markets, and macro shocks haven’t aligned with gold’s almost straight-line ascent.
What does fit?
A wave of speculative money. Hedge funds built record long positions, ETFs saw heavy inflows, and the latest pullback appears tightly linked to shifts in these highly reactive flows. What began as modest central-bank interest seems to have snowballed into a classic momentum trade.
The warning from the Economist is clear: when rallies are driven by hot money rather than fundamentals, the turn — when it comes — can be painful.
A useful reminder of how quickly sentiment, not strategy, can reshape markets.
Source: https://www.economist.com/finance-and-economics/2025/11/16/beware-the-scorching-gold-rally
