The Bank for International Settlements (BIS) has warned that the rapid rise in gold prices has pushed the metal away from its traditional role as a safe asset, turning it into a far more speculative investment. The institution noted that gold and equities have simultaneously entered what it calls the “explosive zone,” a rare phenomenon not seen in the past 50 years.
Hyun Song Shin, Head of the BIS Monetary and Economic Department, said, “Gold has risen together with riskier assets, moving away from its usual safe-asset role and becoming increasingly speculative.” According to Bloomberg, bullion has gained around 20% since early September. BIS says the rally has been driven by expectations of interest-rate cuts, stronger risk appetite, and investor enthusiasm amplified by exaggerated media coverage.
During the same period, U.S. stock markets rebounded sharply from the lows that followed President Donald Trump’s tariff announcement in April, with technology and AI-related stocks leading the rally.
BIS warned that the parallel rise of gold and equities heightens the risk of a bubble, stating, “After an explosive phase, bubbles typically burst with a sharp and rapid correction.” The institution pointed to the 1980 gold bubble as a historical example, but noted that some corrections can unfold more gradually.
