Gold Mid-Year Outlook 2025

One for the record books

Gold closed out the first half of the year as one of the top-performing major asset classes, rising nearly 26% over the period (Chart 1). It recorded 26 new all-time highs (ATHs) in H1 2025 having broken through 40 new ATHs in 2024 (Table 1).

Behind this was a combination of factors, including:

• a weaker US dollar
• rangebound yields with expectations of future rate cuts
• heightened geopolitical tensions – some of these directly or indirectly linked to US trade policy.

Stronger demand also came from increased trading activity across OTC markets, exchanges, and ETFs. This lifted average gold trading volumes to US$329bn per day during H1 – the highest semi-annual figure on record.¹

Central banks also contributed with continued buying at a robust pace – even if not at the record levels of previous quarters.

A new trade order

As the world has grappled with uncertain and confrontational trade negotiations, one of the most significant macro themes so far this year has been the underperformance of the US dollar, which had its worst start to a year since 1973.²

This was also seen through the underperformance of US Treasuries which, for more than a century, had been the epitome of safety. Yet, inflows into Treasuries faltered in April amid heightened uncertainty.

Conversely, gold ETF demand was particularly strong in the first half of the year, led by notable inflows from all regions. By the end of H1 the combination of a surging gold price and investor flight to safety pushed global gold ETF’s total AUM 41% higher to US$383bn. Total holdings rose by an impressive 397t (equivalent to US$38bn) to 3,616t – the highest month-end level since August 2022.

Trade-related and other geopolitical risks played a large role, not just directly, but by fuelling moves in the dollar, interest rates, and broader market volatility - all of which fed into gold’s appeal as a safe haven. Taken together, these factors have contributed around 16% to gold’s return over the past six months, according to our Gold Return Attribution Model (GRAM),³ broken down as follows (Chart 2):

• Risk and uncertainty – as a trigger for flows from investors looking for effective hedges: 4% (half of which was explained by an increase in the Geopolitical Risk (GPR) Index)⁴
• Opportunity cost – making gold more attractive relative to the US dollar and bond yields: 7% (with the bulk or about 6% linked to dollar weakness)
• Momentum – which can boost trends or, equally, mean-revert them: 5% (mostly connected to positive gold ETF flows).

What to expect in H2

The second half of the year sits on a seesaw, with geoeconomic uncertainty keeping investors on edge. Inflation data have shown signs of improvement, but concerns remain that conditions could deteriorate quickly. Dollar-related pressures are likely to persist, and questions around the end of US exceptionalism may dominate investor discussions. Overall, these conditions position gold as a net beneficiary – but while the fundamentals remain strong, the gold price has already captured part of these dynamics. In turn, sustainable conflict resolution and continued rising stock prices could lure more risk on flows and limit gold’s appeal. 

To assess the effect of such varied conditions, we look at gold’s four key drivers – economic expansion, risk and uncertainty, opportunity cost, and momentum – across three scenarios (Figure 3). 

Consensus expectations: continued normalisation

Market consensus suggests global GDP will move sideways and remain below trend in the second half (Figure 2). World inflation is likely to rise above 5% in H2 as the global impact of tariffs becomes more pronounced – with the market expecting US CPI to reach 2.9%. In response to this mixed economic backdrop, central banks are expected to begin cautiously lowering interest rates towards the end of Q4, with the Fed expected to cut rates by 50bps by the end of the year.

While an advance in trade negotiations is anticipated, the environment will likely remain volatile as seen over the past few months. Overall, geopolitical tensions – particularly between the US and China – are likely to remain elevated, contributing to a generally uncertain market environment.

Impact of consensus expectations on gold

Our analysis, based on our Gold Valuation Framework, suggests that, under current consensus expectations for key macro variables, gold could remain rangebound in H2, closing roughly 0%–5% higher than current levels, equivalent to a 25%–30% annual return.

Technical indicators suggest that gold’s consolidation phase over the past few months is a healthy pause in a broader uptrend, helping to ease previous overbought conditions and potentially setting the stage for renewed upside. 

Falling interest rates and continued uncertainty would maintain investor appetite, particularly via gold ETFs and OTC transactions. At the same time, central bank demand is likely to remain robust in 2025, moderating from its previous records while staying well above the pre-2022 average of 500-600t. 

However, elevated gold prices are likely to continue to curb consumer demand and potentially encourage recycling. This would act as a damper to stronger gold performance.

As we have discussed in the past, looking at consensus expectations often implies a rangebound performance, likely indicating that gold is efficiently reflecting all the currently available information.  

As such, it is important to understand the conditions that may push gold higher or lower from here.

Bull case: deteriorating conditions

For gold to continue its upward trend, economic and/or financial conditions would need to deteriorate further. 

This could be either a more severe stagflationary environment – marked by slower growth, falling consumer confidence and persistent inflationary pressure from tariffs – or an outright recession, characterised by widespread flight-to-quality flows. 

Gold would benefit from lower interest rates and dollar weakness given growing concerns around US economic leadership and policy uncertainty. In this context, central banks could further accelerate their diversification of foreign reserves away from the dollar.⁵

Bull case impact on gold

Our analysis shows that gold would perform strongly in such an environment, potentially rising an additional 10%–15% in H2 and closing the year almost 40% higher.

As we have seen historically during periods of heightened risk, investment demand would significantly outweigh any deceleration in consumer demand and rise in recycling. 

And while flows into gold ETFs in the first half of the year have already been substantial, total holdings at 3,616t remain well below the 2020 peak of 3,925t. Further, gold ETFs have accumulated less than 400t in the past six months and just over 500t in the past twelve. In contrast, gold ETFs have amassed between 700t and 1,100t in previous bull runs (Chart 3). 

Equally, COMEX futures net long positions currently sit near 600t, compared to levels above 1,200t during previous crises. This all suggests meaningful room for further accumulation should conditions deteriorate. 

Bear case: risk resolution 

Sustainable geopolitical and geoeconomic conflict resolution would reduce the need to keep hedges, such as gold, part of investment strategies – encouraging investors, in turn, to take on more risk. 

A full resolution of risk does not seem as likely given what we’ve seen over the past six months. But more encouraging economic growth prospects, even if inflationary pressures were to persist, would push US Treasury yields higher, leading to a steepening of the yield curve. And if inflation stabilised further, the effect on rates would be more substantial. 

Bear case impact on gold

In this scenario, our analysis suggests that gold could retreat by 12%–17% in H2, finishing the year with positive but low double-digit (or even single-digit) returns. This pullback is equivalent to the trade risk premium that partly explains gold’s H1 performance. 

The reduction in risk, combined with an increase in opportunity cost – through rising yields and a stronger dollar – would trigger gold ETF outflows and reduce overall investment demand. We could also see a deceleration in central bank demand if US Treasuries are again favoured.

Gold market technical analysis and speculative positioning suggest that US$3,000/oz would be a natural “support level”, prompting opportunistic investment buying. If gold were to break through these levels, disinvestment may accelerate.

That said, lower gold prices would attract more price-sensitive consumers and discourage recycling, limiting gold’s downside compared to what may otherwise be implied by simply looking at real rates and the US dollar.

Further, in our recent report, What’s a bear case for gold, we review conditions that have previously triggered more substantive pullbacks in the gold price. It’s worth noting that historical drivers such as a major increase in interest rates from current levels or a more saturated gold investment market do not seem to be present to warrant a more extreme dip.

Conclusion

Gold enters the second half of 2025 coming off an exceptionally strong start to the year – up 26% – shaped by a weaker US dollar, persistent geopolitical risk, robust investor demand and continued central bank purchases.

While some of these drivers are expected to persist, the path forward remains highly dependent on multiple factors including trade tensions, inflation dynamics, and monetary policy. 

Consensus expectations suggest a relatively steady finish for gold with moderate upside potential if macro conditions hold. Gold could also be partly supported by contributions from new institutional investors such as Chinese insurance companies.

A more volatile geopolitical and geoeconomic scenario could push gold significantly higher, particularly if more substantial stagflation or recession risks materialise and investor appetite for safe haven assets grows. 

On the flip side, while seemingly unlikely given the current environment – widespread and sustained global trade normalisation would bring higher yields and resurgent risk appetite, challenging gold’s momentum. Gold could also be tested by a visible deceleration in central bank demand beyond current expectations.

In all, given the intrinsic limitations of forecasting the global economy, we believe that gold – through its fundamentals – remains well-positioned to support tactical and strategic investment decisions in the current macro landscape.