GRAPHIC-Markets in 2025: Gold, Goldilocks and the dollar bears

Updates figures after end of U.S. trading

By Marc Jones

LONDON, Dec 31 (Reuters) - Most investors knew this year would be different given Donald Trump's return to power in the world's biggest economy, but few predicted how wild the ride would get, or the end results.

World stocks .MIWD00000PUS recovered from April's "Liberation Day" tariffs' crash and have risen 21% in 2025, a sixth year of double-digit gains in the last seven, but look elsewhere and the surprises jump out.

Gold XAU=, the ultimate safe port in a storm, has surged close to 65% in its best year since the 1979 oil crisis, while the U.S. dollar .DXY is down nearly 10%, oil is off almost 18%, yet the junkiest of junk bonds have soared in the debt markets.

The "Magnificent Seven" U.S. tech giants seem to have lost some of their sparkle since artificial intelligence darling Nvidia NVDA.O became the world's first $5 trillion company in October, and bitcoin has suddenly lost a third of its value too.

DoubleLine fund manager Bill Campbell described 2025 as "the year of change and the year of surprises", with the big moves all "intertwined" in the same seismic issues - the trade war, geopolitics and debt.

"If you were to tell me a priori that Trump was going to come in and use very aggressive trade policies and sequence it the way he has, I would not have expected valuations to be as tight or lofty as they are today," Campbell said.

A 56% boom in shares of European weapons makers .SXPARO has been driven by Trump too, following signals he will scale back Europe's military protection forcing the region - and other NATO members - to rearm.

That also helped drive the best year for European banking shares since 1997 .SX7P, while there's also been a 75% leap in South Korean stocks .KS11 and near-100% returns on defaulted Venezuelan bonds. Silver XAG= and platinum XPT= are up an even more dazzling 145% and 125% respectively.

A trio of U.S. rate cuts, Trump's criticisms of the Federal Reserve and broader debt worries have all impacted bond markets.

The U.S. president's "big, beautiful" spending plans led the 30-year Treasury yield US30YT=RR to surge past 5.1% to its highest since 2007 in May. Though it is now back at 4.8%, the re-expanding gap to short-term rates that bankers dub "term premia" is causing jitters again.

Japan's 30-year yields are back at a record high too. The juxtaposition here is that global bond market volatility is at a four-year low .MOVE, and local-currency emerging market debt has had its best year since 2009.

AI is all part of the debt mix too as firms borrow to invest. Goldman Sachs estimates the big AI "hyperscalers" have spent nearly $400 billion this year and will spend almost $530 billion next year.

ALL THAT GLITTERS

The dollar's decline leaves the euro up almost 14% EUR=EBS in 2025 and the Swiss franc CHF=EBS 14.5% higher. China's yuan CNY=CFXS has just broken through 7 per dollar, while the yen's December bashing leaves it flat for the year.

Trump's re-engagement with Russian President Vladimir Putin has helped the rouble surge 40%, although it remains heavily restricted by sanctions and has just been pipped to the top performer title by a 41% tear from gold producer Ghana's cedi.

Poland's zloty, the Czech crown and Hungarian forint are all between 15% and 21% stronger and Taiwan's dollar jumped 8% in just two days in May, while Mexico's peso and Brazil's real both shrugged off the trade war drama to score double-digit gains.

"We don't think this is just a short-term phenomenon," said Jonny Goulden, head of EM fixed income strategy research at J.P. Morgan. "We think a bear market cycle for EM currencies that has lasted for 14 years now, has turned here."

Argentina has been another standout. Its markets were hammered when President Javier Milei suffered a thumping regional election defeat in September, but then went wild weeks later when a $20 billion pledge from Trump helped Milei romp national midterms.

In crypto, Trump launched a memecoin and gave a presidential pardon to Binance founder Changpeng Zhao. Bitcoin hit an all-time high above $125,000 in October BTC= but then crashed below $88,000 and will end the year down over 6%.

NEW YEAR, NEW FEARS

It won't be a quiet start to next year either.

Trump is already revving up for midterm elections in November and is expected to name his new head of the Federal Reserve shortly, which could be crucial for the central bank's independence.

Investors will be looking to see if China's economy can push on. Israel will hold elections before the end of October, which will keep the fragile Gaza ceasefire in focus. Ending the Ukraine war remains devilishly difficult, while Viktor Orban faces his toughest election yet in Hungary in April and Colombia and Brazil have pivotal elections starting in May and October respectively.

And then there are all of the AI unknowns.

Satori Insights founder Matt King said markets are going into 2026 in a "remarkable" situation in terms of valuations and with leaders like Trump "looking for excuses" to give voters money through stimulus or tax breaks.

"There's just this ongoing risk that we are pushing the limits of what easy money can do," King said.

"Already you are starting to see the cracks appearing around the edges, in terms of growth of term premia (in the bond market), in terms of bitcoin suddenly selling off and in terms of the ongoing gold rally."

(Reporting by Marc Jones in London; Additional reporting by Elizabeth Howcroft in Paris and Pasit Kongkunakornkul in London; Editing by Jamie Freed, Susan Fenton and Diane Craft)

((marc.jones@thomsonreuters.com; +44 (0)20 7513 4042; Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net X/Twitter @marcjonesrtrs))