Gold delivered an exceptional performance in the first half of 2025, rising 26% in US dollar terms and outperforming all major asset classes, according to the World Gold Council’s Gold Mid-Year Outlook 2025.
The metal’s strong rally was propelled by a combination of factors: a softer US dollar, stable interest rates, and heightened geopolitical risks, which drove increased demand from investors. Gold-backed ETFs, over-the-counter markets, and exchange trading all saw robust inflows, while central banks remained active buyers, reinforcing the uptrend.
However, the WGC cautions that the second half of the year could bring mixed results, shaped by a range of macroeconomic forces. Their Gold Valuation Framework outlines three key scenarios:
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Base Case: Gold prices stay relatively stable, with modest gains of up to 5% as rate cuts unfold slowly amid ongoing economic uncertainty.
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Bull Case: A worsening global outlook — including risks of recession or stagflation — could drive gold prices up by 10–15%, as investors gravitate toward safe-haven assets.
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Bear Case: If global tensions ease and economic growth improves, gold could fall by 12–17% due to higher bond yields, a stronger dollar, and declining demand for hedging instruments.
During H1, gold set 26 new all-time highs, and average daily trading volumes hit a record $329 billion. Global holdings in gold ETFs soared by 41%, reaching $383 billion. But soaring prices are starting to dampen retail demand and could lead to an uptick in recycled gold entering the market.
The WGC concluded that while gold’s fundamentals remain solid, its direction in H2 will hinge on the evolving balance between inflation pressures, central bank policy, and global risk sentiment.
Disclaimer: This information has been collected through secondary research and TJM Media Pvt Ltd. is not responsible for any errors in the same.
