A subtle shift in the winds of global finance has drawn fresh attention to the yellow metal, suggesting that what lies ahead for gold may defy conventional forecasts. In the midst of tepid growth and persistent inflation, gold’s trajectory is poised between familiar safe-haven refuge and a surprising new impulse, compelling investors to reconsider its role as both a shield and a strategic position.
Gold’s autumn momentum was evident long before the mid-year mark, yet the speed of its ascent through the first half of 2025 caught many by surprise. As the US dollar faltered to its weakest start since 1973 and bond yields stubbornly stagnated, investors piled into gold in ever-greater numbers, propelling it to a string of record highs. By late June, spot prices had nudged past $3,400 an ounce and the metal had notched twenty-six fresh peaks in just six months. That remarkable run outpaced equities, bonds and most commodity benchmarks, underscoring gold’s resurgence as a core hedge against policy uncertainty and geopolitical risk.
Behind this rally lay more than defensive positioning. Exchange-traded funds dedicated to gold swelled by nearly 400 tonnes, lifting total assets to north of $380 billion. Daily volumes in over-the-counter and exchange trading jumped to a record average of $329 billion, reflecting both speculative interest and genuine portfolio reshaping among institutions. Central banks, while not breaking previous acquisition records, maintained robust purchases as part of their currency diversification programmes, gradually reducing ties to the dollar even as they sought balance sheet resilience.
Amid this backdrop, the London Bullion Market Association’s annual survey of metals analysts painted a more bullish 2025 outlook than earlier in the year. Forecasts were revised upward by roughly 15%, bringing the consensus end-of-year estimate to just over $3,300 an ounce. Forecasters now envisage a range that spans from the low $3,200s to as high as $4,000, a departure from January’s projections that had capped expectations below $3,000. The shift in sentiment stems from mounting US budget deficits, potential dollar weakness and the sense that monetary policy may remain looser for longer, offering a launchpad for further gains.
Looking ahead, the World Gold Council identifies a dual-scenario landscape for the second half of 2025. Under a base case of modest global growth and inflation settling near three per cent in the US, gold might simply consolidate its gains or edge marginally higher as the Federal Reserve trims rates by perhaps fifty basis points. Yet the council also warns of more dramatic outcomes: a slide into stagflation or renewed recessionary fears could ignite an additional ten to fifteen per cent rally, while any détente in geopolitical flashpoints might trigger a pullback of a similar magnitude. Even in the event of a sharper correction, analysts see the $3,000 level acting as a reliable support, beneath which physical demand from consumers and central banks could once again gain traction.
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