Gold’s performance in 2025 has been impressive, after having gained over 20% gains in 2023 and 2024. In the first half of 2025, gold has continued its record-setting pace, rising 26% in US dollar terms.
The weaker US dollar, rangebound rates, and a highly uncertain geo-economic environment have led to increased investment demand.
However, over the last two months, the gold price has remained range-bound.
Is the rally in gold over?
World Gold Council (WGC), using its Gold Valuation Framework, analysed what current market expectations imply for gold’s performance in the second half of 2025, as well as the drivers that could push gold higher, or lower.
Gold Mid-Year Outlook 2025 by WGC suggests that if economists and market participants are correct in their macro predictions, gold may move sideways with some possible upside, increasing an additional 0%-5% in the second half.
However, the economy rarely performs according to consensus. Should economic and financial conditions deteriorate, exacerbating stagflationary pressures and geoeconomic tensions, safe haven demand could significantly increase, pushing gold 10%-15% higher from here.
On the flipside, widespread and sustained conflict resolution – something that appears unlikely in the current environment – would see gold give back 12%-17% of this year’s gains.
Factors Impacting Gold Price
According to technical indicators, gold’s recent consolidation phase is a healthy pause in an overall uptrend, easing previous overbought conditions and possibly paving the way for further upside.
Investor demand would be sustained by declining interest rates and ongoing uncertainty, especially through gold ETFs and over-the-counter trades.
Central bank demand is anticipated to continue to be strong in 2025, decelerating from its historical highs while remaining significantly higher than the pre-2022 average of 500–600 tonnes.
Bull Case Scenario
Gold’s upward trend could be halted by worsening economic and financial conditions, potentially resulting in a severe stagflationary environment or an outright recession. Lower interest rates and dollar weakness could benefit gold, as concerns about US leadership and policy uncertainty prompt central banks to diversify foreign reserves away from the dollar.
Bear Case Scenario
Sustainable geopolitical and geoeconomic conflict resolution could decrease the need for hedges like gold in investment strategies, encouraging investors to take on more risk. This could make investors shift from gold into other assets such as equities.