- Cathie Wood warns gold price may fall after a 75% rally in 2025 and ongoing gains
- Gold's market cap to US money supply ratio hits record high, surpassing 1980 and 1934 levels
- Wood compares current gold valuation to past bubbles, saying economy differs from those periods
Ace American investor Cathie Wood has warned about the potential pullback in gold, which has witnessed an extraordinary rally since 2025. The precious metal clocked nearly 75% gains in 2025 and continues to rise amid the ongoing geopolitical uncertainty.
In an X post on Friday, Wood argued gold looks expensive and vulnerable to a fall and made her case through a historical comparison. She pointed to the market value of gold relative to the US dollar and noted that the ratio has just hit a record high. It is higher than in 1980, when inflation and interest rates were extreme. It also matches levels last seen in 1934, during the Great Depression, the founder and CEO of US-based ARK Invest noted.
“Odds are high that the gold price is heading for a fall. Intraday today, the market cap of gold as a per cent of the US money supply (M2) hit an all-time high: higher than its peak in 1980 when inflation and interest rates soared to the mid-teens and, even more shocking…,” she posted on X on Friday.
Comparing the trends of 1934 and 1980, she argued that today's economy looks nothing like either period
“In our view, the bubble today is not in AI, but in gold. An upturn in the dollar could pop that bubble, a la 1980 to 2000, when the gold price dropped more than 60%,” she said.
She accepted that central banks around the world are reducing reliance on the dollar. However, she does not see this as enough to justify current gold prices.
Gold Rally
In 2025, gold emerged as one of the best-performing assets, gaining as much as 74.5%. A combination of factors, including geopolitical tensions, trade wars, and a central bank's buying spree, contributed to the massive surge in prices of the precious metal, which is considered a safe-haven asset.
After a record rally in 2025, gold prices have risen more than 20% so far in January, marking a sixth straight monthly gain and the largest monthly advance since January 1980, Reuters reported.
Such a steep rally in a short period has sparked speculation about potential froth in gold, with consumers hoping for corrections. In the Indian market, gold prices stood at a record Rs 17,062 per gram for 24-karat on Friday, according to Goodreturns.
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