Gold's luster grows as investors hedge in uncertain times

Wall Street is in the throes of a gold rush, as investors drive the price of the precious metal to new heights.

Gold has been the best investment of the year so far. The price of the precious metal has climbed nearly 27% this year, more than triple the return of the largest U.S. bond funds and towering over the roughly 1% return of big U.S. stocks.more than

After topping $1,800 per ounce in 2011, it’s taken nearly a decade for gold to surpass that level. Gold closed Monday at a record $1,931 an ounce. Analysts at BofA Global Research say gold could reach $3,000 per ounce.

Several factors are pushing gold higher: Investors are anxious about the pandemic's ultimate impact on the economy, worried over resurgent tensions between the U.S. and China, and fearful of runaway inflation as spending to cushion the economic fallout swells the federal budget deficit.

Uncertainty over the outcome of the elections in November may also be giving investors reason to hedge their bets with gold.

Meanwhile, the market’s sharp rebound from its lows in March is making stocks look expensive relative to earnings. Based on forward 12-month earnings, the S&P 500 is trading at a 50% premium to its 20-year average. That's likely making an asset like gold more attractive even as stocks continue to rally, said Sam Stovall, chief investment strategist at CFRA.

“There are many bricks in this wall of worry,” Stovall said.

Here is a closer look at the main reasons behind gold's run to a record:

THE PANDEMIC

The biggest reason for the surge is fear surrounding the pandemic. No one knows how many people the new virus will ultimately kill — or how much of the world’s economy it will destroy. That sways investors toward the metal that has long been considered a safe haven for wealth in...