Markets in 2025: Gold, Goldilocks and the dollar bears

Most investors knew 2025 would be different following Donald Trump's return to power in the world's largest economy, but few anticipated how volatile markets would become—or where they would ultimately land.

Global stocks recovered from April's "Liberation Day" tariff shock and rose 21% this year, marking the sixth double-digit annual gain in the past seven years. Elsewhere, however, market moves defied expectations.

Gold, traditionally a safe haven, surged nearly 70%—its strongest performance since the 1979 oil crisis. In contrast, the US dollar fell almost 10%, oil prices declined about 17%, while high-risk junk bonds rallied strongly.

The so-called "Magnificent Seven" US tech giants lost momentum after Nvidia became the world's first $5 trillion company in October. Bitcoin also shed nearly one-third of its value after reaching record highs earlier in the year.

DoubleLine fund manager Bill Campbell described 2025 as "the year of change and surprises," noting that market moves were deeply interconnected through trade tensions, geopolitics and rising debt.

"If you told me beforehand that Trump would pursue such aggressive trade policies, I would not have expected valuations to remain this elevated," Campbell said.

European defence stocks surged 55% as Trump signalled a reduced US military role in Europe, pushing NATO allies to rearm. European bank shares posted their best year since 1997, while South Korean equities jumped nearly 70%. Defaulted Venezuelan bonds delivered close to 100% returns. Silver and platinum soared 165% and 145%, respectively.

Bond markets were shaped by three US rate cuts, Trump's criticism of the Federal Reserve, and debt concerns. The 30-year US Treasury yield climbed above 5.1% in May—its highest since 2007—before easing to around 4.8%. Japan's 30-year yields also hit record highs.

Despite these moves, global bond market volatility fell to a four-year low, while emerging-market local currency debt recorded its strongest performance since 2009.

Artificial intelligence investment added to debt pressures. Goldman Sachs estimates major AI firms spent nearly $400 billion this year and may invest $530 billion next year.

All that glitters

The dollar's weakness lifted the euro nearly 14% and the Swiss franc 14.5% in 2025. China's yuan broke past 7 per dollar, while the Japanese yen ended the year roughly flat.

Trump's renewed engagement with Russian President Vladimir Putin contributed to a 40% surge in the rouble, while Ghana's cedi rose 34%. Eastern European currencies—including Poland's zloty and Hungary's forint—strengthened 15–20%.

J.P. Morgan strategist Jonny Goulden said emerging-market currencies may have entered a new bull cycle after 14 years of decline.

Argentina's markets whipsawed after President Javier Milei's regional election defeat, then rallied sharply following a $20 billion pledge from Trump ahead of midterm elections.

In cryptocurrencies, Trump launched a memecoin and pardoned Binance founder Changpeng Zhao. Bitcoin peaked above $125,000 in October before falling to $88,000, ending the year down nearly 7%.

New year, new fears

Markets head into 2026 amid renewed uncertainty. Trump is preparing for US midterm elections and is expected to appoint a new Federal Reserve chair—raising questions about central bank independence.

China's growth outlook, elections in Israel, Hungary, Colombia and Brazil, and the unresolved wars in Ukraine and Gaza will all remain in focus.

Satori Insights founder Matt King warned that markets are entering 2026 with stretched valuations and growing reliance on stimulus.

"There's an ongoing risk that we are pushing the limits of what easy money can do," he said, pointing to rising bond term premiums, falling bitcoin prices and the continuing gold rally.