Legendary bond investor Bill Gross has advised caution regarding gold investments, despite its recent surge.
Gold prices have been on a searing rally in 2025 so far and have doubled since early 2024, soaring more than 56% year-to-date, rising from $2,712 per troy ounce at the beginning of 2025 to $4,249 on Saturday.
Gold Rally Overextended?
However, Gross suggested that the gold rally appears overextended, with prices dropping over 2% on Friday after reaching a record high. "Gold has become a momentum/meme asset. If you want to own it, wait awhile," Gross said in a post on X.
The "Bond King" also expressed concerns over budget deficits and a slowing economy. He also highlighted Wall Street’s unease about potential issues in banks’ loan portfolios.
According to Gross, recent disclosures from Zions Bancorporation NA (NASDAQ:ZION) and Western Alliance Bancorp (NYSE:WAL) about troubled borrowers followed JPMorgan CEO Jamie Dimon‘s warning about the collapse of auto lender Tricolor.
Regional Bank ‘Cockroaches' Impact On Stocks
Dimon referred to this as a “cockroach,” indicating more hidden problems. Gross predicted that regional bank issues might continue affecting stocks and bonds.
"Regional bank ‘cockroaches' may continue to affect stocks AND bonds. 10 year Treasury has no business below 4% though 4.5% more like it — too much supply/deficits despite slowing, soon-to-be 1% growth economy," Gross said.
While analysts do not see systemic problems, memories of the Silicon Valley Bank collapse caused stocks to fall on Thursday, briefly pushing the 10-year Treasury yield below 4%.
Gross believes this reaction was exaggerated and expects yields to rise significantly above Friday’s close of around 4.01%, due to the federal government’s need to issue more debt amid slowing growth.
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Gross' Contrasting Opinion On Gold
The cautionary stance by Gross comes at a time when other financial heavyweights are making significant moves in the gold market.
Ed Yardeni, a market veteran, has recently increased his price target for gold, forecasting it to reach $5,000 by 2026 and $10,000 by 2030. This bullish outlook contrasts with Gross’s warning, highlighting the divided sentiment among experts.
Moreover, Ray Dalio, founder of Bridgewater Associates, has been a strong advocate for gold investment, with his fund seeing significant gains in 2025 due to the metal’s record high prices.
Dalio’s strategy of diversification, as discussed in a recent podcast, underscores the uncertainty facing global economies, which he describes as entering “very, very dark times.”
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