Rally in Stocks Resumes as Gold Breaks Above $4,000

US stock futures edged higher on Wednesday, signaling that the market’s rally may be ready to pick up again as investors brushed off concerns about stretched valuations and the massive flows into artificial intelligence. Gold, meanwhile, soared past the $4,000 mark per ounce.

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Futures tied to the S&P 500 rose about 0.2% after the benchmark ended its eight-day winning streak in the previous session. Contracts on the Nasdaq 100 also advanced. In premarket trading, Advanced Micro Devices Inc. (AMD) extended its sharp gains following a powerful rally sparked by its multibillion-dollar AI partnership with OpenAI. Tesla Inc. climbed as well after unveiling a more affordable version of its best-selling electric vehicle.

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Investors have recently voiced growing unease that the S&P 500’s $16 trillion surge since April may have run too far, too fast. Tuesday’s decline came amid renewed debate over the lofty valuations surrounding AI stocks, drawing comparisons to the dot-com bubble that burst 25 years ago. Yet despite the warnings, many traders are hesitant to step aside, fearing they could miss out on further upside as the coming earnings season offers insight into whether the rally can endure.

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“There are definitely some worrying signs in this AI-driven rally it reminds me of 1997 when I began my career,” said Gilles Guibout, head of European equities at Axa Investment Managers. “Back then, the bubble popped in 2000, but the managers who stayed out too early actually lost their clients money. The key now is to remain invested but stay cautious keep your hand on the exit button and maintain diversification.”

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The U.S. dollar strengthened for a third consecutive session against major currencies, while Treasury yields ticked slightly lower. Across the Atlantic, Europe’s Stoxx 600 index climbed 0.6%, positioning it for another record close. Gains were led by the basic resources sector, which jumped more than 1%. Banking stocks also advanced after Lloyds Banking Group Plc rose on a favorable ruling regarding disputed auto loans.

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European equities got an additional lift from signs of progress in resolving France’s budget standoff. The CAC 40 index gained as much as 0.8%, while French bond yields eased. Not all sectors shared in the optimism, however the region’s technology sub-index lagged. BMW AG weighed on automakers after the German luxury brand cut its earnings outlook due to weak Chinese demand and higher costs tied to global tariffs.

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The excitement surrounding AI continued to dominate investor sentiment. This month alone, markets have celebrated a series of partnerships between OpenAI, Nvidia Corp., and Asian firms like Hitachi Ltd. and Fujitsu Ltd. Elon Musk’s AI startup, xAI, also made headlines as it seeks to raise more capital than initially planned including fresh backing from Nvidia in a round that could value the company at roughly $20 billion.

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Still, some veteran investors are sounding alarms about excessive exuberance. Ray Dalio, billionaire founder of Bridgewater Associates, cautioned that the market’s explosive rise has all the hallmarks of a bubble. “This feels frothy to me,” Dalio said. He pointed to soaring valuations fueled by AI mania as a potential warning sign.

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Dalio added that gold remains an appealing store of value in the current environment one characterized by surging government debt, persistent geopolitical risks, and fading confidence in national currencies.

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Those same concerns, along with renewed worries about the U.S. economy and the potential for another government shutdown, have fueled a powerful rally in the precious metal. Gold has climbed 53% so far this year, positioning it for its strongest annual performance since 1979. On Wednesday, it jumped as much as 1.4% to $4,039.05 an ounce.

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In currency markets, the Japanese yen slipped to its weakest level since February following Sanae Takaichi’s surprise victory to lead Japan’s ruling Liberal Democratic Party. Her win seen as supportive of continued stimulus tempered expectations for the Bank of Japan to raise interest rates anytime soon.

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Overall, the mood across global markets reflects a familiar tension: investors balancing enthusiasm for the AI revolution against fears of an overheated rally. While many remain wary of valuations that seem detached from fundamentals, few want to miss out on what could still be another leg higher in one of the most powerful market surges in recent memory.

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