The Gold market concluded the final full trading week of 2025 by shattering historic milestones, with the February 2026 contract settling at $4,552.70 per ounce. In a year defined by its defiance of traditional economic models, the precious metal has evolved from a cyclical hedge into a primary structural asset for global institutional portfolios. For investors in Israel and globally, this rally represents a fundamental shift in market confidence as geopolitical stability and monetary system integrity remain in focus.

Geopolitical Risk and Safe-Haven Resurgence

A primary catalyst for this week’s 1.11% daily gain was the continued ratcheting of international tensions, which has kept the safe-haven demand for gold at elevated levels. Active U.S. enforcement of sanctions on Venezuelan tankers, coupled with persistent hostilities between Russia and Ukraine, has introduced a significant risk premium into the commodities market. This environment was further intensified by reports of new military strikes in Nigeria and rising friction between Japan and China, forcing investors to park capital in assets that operate outside the SWIFT payment system.

The Dollar’s Decline and Monetary Policy Divergence

Despite stronger-than-expected US GDP growth of 4.3% reported on Tuesday, the U.S. Dollar Index (DXY) fell by approximately 0.6% over the week, providing a direct tailwind for bullion. Markets are increasingly pricing in scenarios beyond traditional economic cycles, maintaining expectations for two Federal Reserve rate cuts in 2026 even as officials appear divided. This monetary policy skepticism is compounded by a structural trend of central bank diversification, as the dollar’s share of global reserves has declined to approximately 58% in 2025.

Institutional Rebalancing and Inflation Hedging

The 2025 rally has fundamentally altered Strategic Asset Allocation (SAA), with institutional investors—including pension funds and insurance companies—increasing gold exposure from traditional 2-5% levels to as high as 12%. This rebalancing is driven by concerns over fiscal sustainability and the erosion of confidence in sovereign debt. Unlike previous cycles, gold has maintained its advance despite positive real yields, suggesting that participants are treating the metal as insurance against systemic instability rather than a simple inflation hedge.

Looking ahead, the outlook for gold remains decidedly positive, with J.P. Morgan forecasting prices could average $5,055 by the final quarter of 2026. While the Relative Strength Index (RSI) currently signals overbought conditions, the structural bid from emerging market central banks and the potential for a hyperinflation scenario in the U.S. could prevent significant corrections. Key risks to monitor include a hawkish shift in Fed policy if inflation remains sticky or a sudden recovery in the dollar driven by safe-haven flows into U.S. assets. However, the fundamental trend of de-dollarization suggests that any short-term pullbacks toward the $4,300 support level will likely attract fresh long-term buying interest.