Gold has had a banner year in 2025, gaining more than 58% and outperforming the market by leaps and bounds. For context, the S&P 500 is up about 14%, while Bitcoin has lost around 6% (with Bitcoin-leveraged stocks performing far worse than the crypto itself).
Among precious metals, silver has outshone gold with a 78% year-to-date (YTD) gain. Still, gold appears well-positioned to sustain its rally into 2026—fueled in part by President Donald Trump’s return to power and the market’s reaction to his policies.
Volatility Is Once Again on the Rise
Precious metals enjoy strong runs during stretches of heightened volatility. That’s because volatility causes investors to engage in flights to safety, reallocating capital from riskier asset classes like stocks to safe-haven assets like gold.
And volatility has been a hallmark of Trump’s second administration. From Inauguration Day to March 10, volatility—as measured by the Chicago Board Options Exchange's CBOE Volatility Index CBOE: VIX—increased by 85% as rumors of the president’s tariff plans began to emerge.
The VIX then pulled back 20% by the end of March, before skyrocketing to a five-year high during the market’s so-called tariff tantrum in April, when the index jumped 135% the first week of April.
The index settled down by 70% by the end of September after the president walked back tariffs against numerous countries. But since then, it has increased 35%, raising concerns about another bout of heightened volatility through the end of the year.
The SCOTUS Tariff Decision Looms
A critical legal development could further impact gold’s trajectory: the U.S. Supreme Court is currently reviewing whether Trump has the authority to impose tariffs without Congressional approval.
If the Supreme Court rules in favor of Trump, tariffs—with or without congressional approval—remain, which would have the potential to further erode the purchasing power of the U.S. dollar and drive gold prices higher as a result.
But if the court rules against Trump's trade policies and the administration is forced to reverse its tariffs, that too could be a boon for gold. On Sunday, Fortune reported: “President Donald Trump’s administration is working behind the scenes on fallback options if the Supreme Court strikes down one of his major tariff authorities.” Any such moves are likely to sustain investor anxiety and, in turn, demand for safe-haven assets.
Foreign Policy and Geopolitical Instability Drive Gold Prices
Despite campaign pledges to reduce global conflict, Trump’s second term has not delivered meaningful geopolitical de-escalation. The Russia-Ukraine war, now entering its fourth year, continues with no end in sight.
Additionally, despite Trump brokering a ceasefire between Israel and Hamas in early October, warfare in that corner of the world hasn’t ceased, with near-daily strikes continuing in the Gaza Strip. Since the Hamas attack on Oct. 7, 2023, the price of gold has risen more than 125%.
More recently, the Trump administration has ramped up military activity in the Caribbean, signaling potential intervention in Venezuela. The USS Gerald R. Ford aircraft carrier is already positioned near the South American nation, and approximately 15,000 U.S. troops are in the region, with B-52 and B-1 bombers conducting simulated bombing exercises near Venezuela’s airspace—a significant escalation.
Geopolitical instability has historically boosted demand for gold, and the current environment shows no signs of reversing that trend.
Dollar Weakness and Rate Cuts Are Strengthening Gold’s Bull Case
Two more price drivers for gold are currency devaluation and interest rate cuts. The U.S. dollar index is down nearly 8% from its YTD high, which it hit a week before Trump's inauguration.
Trump’s tariff announcements, which fueled the first stage of the USD’s decline this year, have raised inflation expectations.
At the same time, soft economic data—including rising unemployment, increasing layoffs, and weak nonfarm payrolls—have already resulted in the Federal Reserve cutting rates twice this year.
If current Fed Chairman Jerome Powell is replaced with a dovish Trump ally when his term ends in May 2026, more interest rate cuts could be in store next year.
Lower interest rates would appeal to gold bugs, since interest rates and gold prices have a historically inverse relationship. When the former decreases, the latter tends to increase since yield-producing assets lose their luster in a lower-rate environment.
In those cases, investors traditionally turn to gold for the precious metal’s upside potential. Both of those outcomes are likely if the Fed continues down a path of looser monetary policy.
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