Wall Street Wants You to Buy Gold. It’s Still Risky.
Wall Street has gold fever. Investors should be careful.
3 min
J.P. Morgan and Goldman Sachs advise continuing to hold gold. BNP Paribas just raised its forecast for gold prices. For months now, BlackRock has recommended buying gold to diversify portfolios.
So far, the recommendations have been spot on. The most active gold futures contract hit another record high on Thursday, closing at $2,991.30 an ounce, marking its tenth record close in 2025. The popular SPDR Gold Shares exchange-traded fund, which tracks gold bullion, also closed at a record of $275.13.
But the megarally isn’t without risks.
Gold has now closed at record levels 10 times this year, after closing out its best year in over a decade, with 46 records in 2024. Drivers for the rally have been plentiful: Strong buying from central banks, a weaker dollar, realignment of international relationships as President Donald Trump slaps tariffs on goods from the U.S.’s closest allies, and wars abroad have pushed investors to seek safety in gold.
The conventional wisdom says the path of least resistance for gold is higher in part because prices are above their 200- and 100-day moving averages of $2,619.51 and $2,756.11, respectively, based on Wednesday’s close. When a price moves above its moving average, it is a sign that an uptrend is likely to continue.
BNP Paribas forecasts gold prices will rise above $3,100 an ounce in the second quarter of 2025. It assumes the average gold price in 2025 will be $2,990, 8% higher than its prior forecast. A price of $3,100 would represent a gain of 5.2% from its closing price on Wednesday.
“The biggest change to our previous view is the impact of the Trump tariff threats, which is resulting in fears of renewed US inflation on the one hand, and slower US and global growth expectations, on the other, driving increased safe-haven demand for gold,” David Wilson, senior commodities strategist as the bank, said in a research note Wednesday.
Still, when optimism is so widespread, it is smart to also consider the risks, even with investments such as gold that are famous for being safe.
For one, it could be said that the metal is overvalued, given that it has been in a bull market since September 2022. That raises the prospect that gold has already priced in much of its potential over the period, leaving it vulnerable to corrections. Those gains could tempt early investors to sell to lock in profits.
Gold could also struggle in a world where Washington’s efforts to overhaul the federal government prove successful, even if economists have their doubts. Trump and Elon Musk’s Department of Government Efficiency is slashing the federal workforce, which the administration has said will boost productivity, critical for economic growth, as laid-off government workers find more productive jobs in the private sector.
Economic growth and gold are inversely related. When the economy is booming, investors tend to favor riskier assets like stocks over gold, which loses its appeal.
“Such a development would be terrible news for gold whose price may then return to its historical norm, as expressed in oil-equivalent terms,” wrote Charles Gave, founder of Gavekal Research, in a research note on Wednesday. This implies a 50% fall, the note says.
On the other hand, there are plenty of reasons why prices could keep rising. An index of economic uncertainty index is high, while more tariffs would lead to inflation, both benefiting gold. The possibility that the U.S. government might value its gold holdings at market prices, rather than the current $42.2222 an ounce, would help as well.
Treasury Secretary Scott Bessent triggered speculation about revaluation in early February , saying the U.S. wants to monetize its balance sheet. He dismissed the idea in an interview with Bloomberg last month, but market chatter about the topic continues.
Revaluing the U.S.’s gold holdings would show interest in the commodity by the government, potentially adding to the momentum in the price. The statutory price of gold, set by law , hasn’t moved since 1973.
The evidence for gains is strong. Just don’t completely ignore the risks when putting your money to work.
Corrections & Amplifications: The most active gold futures contract closed at $2,991.30 on Thursday. An earlier version of this article incorrectly said it closed at $2,984.30, the price of the front-month contract.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com undefined undefined
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The federal budget has rattled property investors. But the biggest mistake isn’t the tax changes, it’s the conclusion many are drawing from them.
2 min
The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
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