Gold’s dramatic rebound this year is drawing heightened scrutiny from global regulators, with the Bank for International Settlements warning that the metal’s behavior increasingly resembles speculative trading rather than safe-haven demand. The BIS said the simultaneous surge in gold and stocks – a pattern not seen in at least 50 years – raises the possibility that both markets may be entering bubble-like territory.
Spot gold has jumped roughly 60% year-to-date, putting it on track for its strongest annual performance since 1979. At the same time, global equity benchmarks continue to hit fresh highs, powered largely by momentum in artificial-intelligence and technology stocks. That parallel rise is unusual, as gold typically rallies when equities weaken, not when risk appetite is expanding across asset classes.
Why the BIS Sees a Shift in Gold’s Role
The BIS noted that gold’s rally is no longer behaving like a response to market anxiety or geopolitical risk, but instead mirrors patterns of speculative positioning. Analysts said investors appear to be treating gold more as a high-beta trade tied to liquidity conditions rather than as a hedge against volatility.
The surge has continued despite limited stress indicators, suggesting that central-bank buying, leveraged commodity inflows, and widespread enthusiasm for AI-driven market gains are reinforcing each other. As previously covered, liquidity and sentiment have been major drivers of asset performance this year, and the BIS said those same dynamics now appear to be spilling into the precious-metals complex.
The institution also highlighted that traditional valuation anchors for gold – such as real yields, inflation expectations, and currency dynamics —-have played a smaller role in recent months. Instead, the price trajectory resembles momentum-driven markets where positioning, not fundamentals, sets the tone.
Investor Risks and Market Outlook
The BIS warned that when gold and equities rally together, portfolio hedges become less effective, increasing the likelihood of simultaneous drawdowns if sentiment shifts. For investors relying on gold as ballast against equity volatility, the metal’s evolving behavior may reduce diversification benefits.
Equity markets also face heightened scrutiny as valuations broaden beyond AI-linked megacaps, raising concerns about whether liquidity support and momentum trading have pushed prices beyond fundamentals. If expectations for monetary easing change or if earnings momentum weakens, both gold and equities could be vulnerable to abrupt corrections.
The BIS did not forecast an imminent downturn but said the current alignment of asset prices shows “unusual and potentially destabilizing” characteristics. Analysts expect volatility to pick up into 2026 as markets test whether gold’s rapid ascent can persist without a clear macro catalyst.
