21st July 2025
Gold prices have been on a strong upward trajectory in 2025, driven by a combination of geopolitical uncertainty, central bank demand, and a weaker U.S. dollar. As of July 21, 2025, the spot gold price is around $3,364.32 per troy ounce, up 1.42% from the previous day and 41.87% higher than a year ago. The price peaked at $3,499.88 on April 22, 2025, reflecting a 26% rise in the first half of the year, outpacing many other asset classes.
Key Drivers:
- Geopolitical and Economic Uncertainty: Ongoing U.S.-China trade tensions, tariff policies, and global geopolitical risks, including conflicts in Ukraine and the Middle East, have bolstered gold’s appeal as a safe-haven asset. These factors contributed about 4% to gold’s return in the first half of 2025, per the World Gold Council’s Gold Return Attribution Model.
- Central Bank Buying: Central banks are projected to purchase around 900 tonnes of gold in 2025, down slightly from prior years but still robust, driven by diversification away from the U.S. dollar, which has weakened significantly. The dollar’s share of global reserves dropped to 57.8% in Q4 2024, encouraging gold accumulation.
- Investor Demand: Gold ETFs and futures markets have seen strong inflows, with global ETF holdings rising and non-commercial futures positions in COMEX gold hitting a record high in 2024. Combined bar, coin, and ETF holdings grew 3% year-on-year to 49,400 tonnes.
- U.S. Dollar Weakness and Rates: A weaker dollar and rangebound U.S. Treasury yields have made gold more attractive, contributing roughly 7% to its price rise in H1 2025. Expectations of Federal Reserve rate cuts (100 bps by year-end) further support gold’s outlook.
Forecasts for 2025 and Beyond:
- J.P. Morgan: Predicts gold will average $3,675/oz by Q4 2025 and reach $4,000/oz by mid-2026, citing sustained central bank and investor demand.
- World Gold Council: Expects gold to trade rangebound in H2 2025, with a potential 0-5% upside, implying a 25-30% annual return, driven by steady ETF and central bank demand.
- Goldman Sachs: Forecasts $3,700/oz by year-end, with a possible spike to $3,880/oz in a recession scenario.
- Reuters Poll: Analysts predict an average annual price above $3,000, supported by trade friction and dollar diversification.
- LiteFinance: Estimates range from $3,619.67 to $3,653.60 by year-end, with some citing inflation and geopolitical instability as key drivers.
- Long-Term Outlook: Some analysts project gold reaching $4,000 by 2026-2027 and even $6,800-$7,000 by 2040, driven by inflation and monetary policy trends. However, bearish scenarios suggest potential downside if geopolitical tensions ease or interest rates rise sharply.
Market Trends:
- Jewelry Demand: High prices have reduced physical jewelry demand, particularly in India, where imports fell 40% in June to a two-year low. However, consumer spending on gold jewelry rose 9% year-on-year to $35 billion in Q1 2025.
- Supply: Total gold supply grew 1% in Q1 to 1,206 tonnes, with mine production hitting a Q1 record of 856 tonnes, though recycling dipped slightly.
- Technical Analysis: Posts on X indicate gold is in a bullish trend, with recent price action invalidating bearish patterns like a rising wedge. Analysts suggest a breakout above $3,350 could signal further gains, though a failure to hold key levels might lead to a correction.
Risks and Considerations:
- A stronger U.S. dollar or rising interest rates could pressure gold prices.
- Easing geopolitical tensions or a slowdown in central bank buying might limit upside.
- Competition from cryptocurrencies or other high-yield assets could dampen demand.
Gold remains a favored hedge against inflation and uncertainty, but its volatility and lack of dividends make it less suitable for income-focused investors.