WGC: Gold Keeps Climbing, Future Hinges on Economic And Geopolitical Crossroads
The comments below are an edited and abridged synopsis of an article by Giann Liguid, Investing News Network
Gold Market Outlook 2025: After A Record-Setting First Half, What’s Next?
Gold delivered an extraordinary performance in the first half of 2025, rising 26% in US dollar terms and setting 26 new all-time highs. According to the World Gold Council’s (WGC) mid-year report, this surge was fuelled by a potent combination of macroeconomic pressures, including a weakening US dollar, muted bond yields, and geopolitical instability—all of which underpinned strong demand from investors seeking a safe haven.
Trading activity reflected this interest, reaching an unprecedented daily average of US$329 billion. Institutional and retail investors alike turned to gold as both a short-term hedge and long-term store of value. ETFs led the charge, with holdings increasing by 397 metric tons—the largest surge since August 2022—pushing total assets under management to US$383 billion, a 41% jump year-to-date.
The Gold Market Outlook 2025 indicates that gold’s momentum could persist, though the second half of the year presents a more complex picture. Analysts expect a potentially rangebound market with modest upside of 0 to 5% under current economic forecasts. However, sharp deviations in macro conditions—including stagflation or recession—could lift gold by another 10 to 15% before year-end.
The WGC’s Gold Return Attribution Model (GRAM) credited three main drivers for gold’s H1 strength: risk and uncertainty (4%), reduced opportunity cost due to low yields (7%), and market momentum (5%). Altogether, these accounted for 16 percentage points of gold’s total 26% return in the first half.
Looking ahead, the Gold Market Outlook 2025 outlines three possible scenarios for H2:
- Base Case – In a moderate environment with inflation stabilizing around 5% and a potential 50-basis-point US rate cut, gold could see modest gains. Continued support from ETF and OTC investors might offset slower consumer demand and higher recycling activity.
- Bull Case – If global economic conditions deteriorate into stagflation or recession, gold could rally by 10 to 15%, driven by a flight to safety, renewed ETF inflows, and heavier positioning in futures. This would mirror crisis-era rallies seen in 2008 and the early pandemic.
- Bear Case – A stabilizing global environment, including resolution of key conflicts or normalization in trade, could diminish gold’s appeal. In this scenario, stronger yields and increased investor appetite for risk assets might push gold down by 12 to 17%.
Regardless of the scenario, gold’s role as a resilient portfolio hedge remains intact. Even as retail demand faces potential headwinds, structural demand from central banks and institutions—including increased allocations by Chinese insurers—could lend continued support.
The Gold Market Outlook 2025 suggests that while gold may consolidate in the near term, it remains highly responsive to shifts in macro and geopolitical conditions. Investors would be wise to stay alert—gold still has plenty of room to move.
