After a record-breaking first half, gold’s future hinges on inflation, central bank moves, and geopolitical currents.
Gold has dominated global asset performance in the first half of 2025, posting an impressive 26% gain in US dollar terms, according to the World Gold Council’s Mid-Year Outlook 2025. The rally was powered by a weakened dollar, steady interest rates, and rising geopolitical uncertainty — all of which fuelled strong flows into gold-backed ETFs, over-the-counter markets, and global exchanges.
Central banks also continued to be strong net buyers, adding further support to gold’s momentum. The surge saw gold set 26 new all-time highs in the first half of the year, while average daily trading volumes hit a record $329 billion. ETF holdings jumped 41% to $383 billion, marking renewed interest in gold as a strategic hedge.
Looking to the second half of the year, the World Gold Council outlined three scenarios based on its Gold Valuation Framework:
Base Case: Gold prices are likely to remain stable or register a slight gain of 0–5%, supported by tentative rate cuts and persistent macroeconomic uncertainty.
Bull Case: Should the global economy tip into stagflation or recession, gold could see a further 10–15% rise as investors increase their safe-haven allocations.
Bear Case: A combination of global conflict resolution, improved economic growth, and a stronger US dollar could lead to a 12–17% pullback, as investors reduce hedging positions and higher yields dent gold’s appeal.
Despite the bullish start, the Council warned that high prices may begin to curb consumer jewellery demand and could lead to increased gold recycling, especially in price-sensitive markets.
While gold’s fundamentals remain robust, its trajectory will depend on how inflation trends evolve, how central banks adjust their policy stance, and how geopolitical risks unfold in the coming months. For now, gold remains at the centre of global asset allocation conversations — a rare blend of resilience, risk hedge, and liquidity.