Wall Street is hedging its bets. While the S&P 500, the world’s most followed stock market index, keeps hitting record highs every other day amid a three-year bull run, gold, which usually moves in the opposite direction to shares, has been on a tear of its own.

The price of the safe-haven asset has jumped more than 50 per cent so far this year to breach $4,000 (€3,443) an ounce for the first time.

Reasons for the gold rush abound. Many market strategists say the precious metal is being used as a hedge against economic uncertainty caused by Trump administration tariffs.

Some point to a fall this year in the value of the dollar, the currency in which gold is priced. And others say gold is a safe bet in case the artificial intelligence (AI) boom that has been fuelling the stock market starts to fizzle out.

But, for Ron O’Hanley, chairman and chief executive of State Street – a leading administrator to the global investment management industry and one of the biggest asset managers in its own right – the reason for the anomaly may be more simple.

[ ‘Gold-plated Fomo’ powers bullion’s record-breaking rallyOpens in new window ]

“In some ways, gold is an indicator of what investors’ beliefs are about long-term inflation prospects,” O’Hanley says, speaking to The Irish Times in Dublin this week.

There are good reasons to be concerned about rising inflation over time.

“If you look at government debt levels, there’s been a fundamental change if you think about the ’08 period to where we are now,” he says. “The pandemic proved quite costly in the taking on of government debt.”

Global government debt surged from 58 per cent of gross domestic product (GDP) in 2007 to 93 per cent last year, or almost $100 trillion, driven by the borrowings to support businesses and households during Covid lockdowns, according to the International Monetary Fund.

Some investors believe central banks may, eventually, tolerate higher inflation to reduce