According to precious metals analysts at the World Gold Council (WGC), the outlook for gold prices is skewed to the upside over the next 18 months. Silver and platinum are expected to maintain their recent strength through 2026.
“Precious metal prices surged to record highs in the first half of 2025, on top of a 20% rise in 2024, with the rally led by gold, driven by a weaker dollar, range-bound interest rates, and a highly uncertain geo-economic environment, as well as robust investment demand,” wrote Jeetendra Khadan, Senior Economist in the WGC’s Outlook Forecasting Group, and Research Analyst Kaltrina Temaj.
The analysts noted that one question repeatedly posed by investors is, “Is gold topped out, or does it have enough fuel to keep going higher?”
Utilizing their gold valuation framework, the World Gold Council analyzed what current market expectations indicate for gold’s performance in the second half of 2025, as well as a variety of drivers that could push gold prices higher or lower. They wrote:
“If the macro forecasts of economists and market participants are correct, our analysis suggests gold may trade sideways with a slight upward bias – an extra 0%-5% appreciation in the second half of the year. However, economies rarely evolve as per consensus. If economic and financial conditions deteriorate, exacerbating stagflationary pressures and geo-economic tensions, safe-haven demand could rise significantly, pushing gold prices another 10%-15% higher from current levels. On the other hand, a widespread and sustained resolution of conflicts – which seems unlikely in the current environment – would lead to gold giving back 12%-17% of its gains this year.”
The World Gold Council points out that gold’s performance has been nothing short of record-breaking so far in 2025.
“Gold ended the first half of the year as one of the best-performing major asset classes, up nearly 26% during the period,” they noted. “It clocked 26 new all-time highs in H1 2025, having already broken 40 new records in 2024.”Analysts said this outperformance was the result of a confluence of factors, including a weaker dollar, yield volatility due to expectations of future rate cuts, and “heightened geopolitical tensions – some directly or indirectly linked to US trade policy.”
“Stronger demand also came from increased over-the-counter (OTC), exchange, and ETF trading activity,” they said. “This resulted in a H1 average daily trading volume for gold of $329bn – the highest half-year figure on record. Central banks also contributed by continuing to purchase at a robust pace – even if not at the record levels of previous quarters.”
The World Gold Council points out that “One of the most important macro themes so far this year has been the weak performance of the US dollar, which clocked its worst annual start since 1973, also reflected in the tepid performance of US Treasuries, a byword for safety for more than a century. However, flows into US Treasuries faltered in April against a backdrop of heightened uncertainty.”
“Conversely, demand for gold-backed ETFs was especially robust in H1, with significant inflows across all regions,” they said. “By the end of H1, the combined effect of soaring gold prices and investors flocking to safe-haven assets pushed the total assets under management (AUM) of global gold-backed ETFs up 41% to $383bn. Total holdings increased by a staggering 397 tonnes (equivalent to $38bn) to reach 3,616 tonnes – the highest month-end level since August 2022.”
“Trade-related and other geopolitical risks played a huge role, not only directly, but also by driving changes in the dollar, interest rates, and wider market volatility – all of which added to gold’s appeal as a safe haven,” they added. “All in all, these factors contributed approximately 16% to gold’s returns over the past six months.”
Using their Gold Return Attribution Model (GRAM), the analysts broke down the influences as follows:
The World Gold Council analysts then outlined their different potential scenarios for the second half of 2025.
“The second half of the year for gold is like sitting on a see-saw, with geo-economic uncertainties making investors jumpy,” they said. “Inflation data shows signs of improvement, but there remain concerns that things could quickly deteriorate. Dollar-related pressures may persist, and the question of the end of US exceptionalism may dominate investor discussions. Overall, these conditions make gold a net beneficiary – but even though fundamentals remain strong, prices have partly captured these dynamics. In contrast, sustainable conflict resolution and consistently rising stock prices may attract more risk-seeking flows and limit gold’s appeal.”
“The market consensus suggests global GDP will trade sideways and remain below trend in H2,” they wrote. “As the global impacts of tariffs become more visible, global inflation is likely to drift above 5% in the second half of the year – with markets expecting US CPI to reach 2.9%. In response to this complex economic backdrop, central banks are expected to start cautiously cutting interest rates by the end of Q4, with the Fed forecast to cut interest rates by 50bps before year-end.”
The analysts said that while trade negotiations are expected to make some progress, the environment may remain volatile for the remainder of the year, “Overall, geopolitical tensions are likely to remain elevated, leading to a generally uncertain market environment.”
“Our analysis, based on our gold valuation framework, suggests that under current prevailing expectations for key macro variables, gold is likely to remain range-bound in H2, closing at approximately 0%-5% higher than current levels, which equates to a 25%-30% annual return,” they said. “Technical indicators suggest that the period of consolidation in the past few months was a healthy pause in a broader upward trend, helping to alleviate prior overbought conditions and potentially laying the groundwork for a new rally.”
They added, “Lower interest rates and persistent uncertainties will maintain investor appetite, particularly through gold-backed ETFs and over-the-counter, while central bank demand in 2025 is likely to remain robust, moderating from previous record levels, but remaining well above the 500-600t average pre-2022.”
However, high gold prices may continue to curb consumer demand and may encourage them to sell, which would “be a factor limiting stronger gold performance.”
The World Gold Council points out that in a bullish scenario, “This could be a more serious stagflationary environment – characterised by slowing growth, declining consumer confidence, and persistent inflationary pressures from tariffs – or an outright recession, characterised by a broad-based flight of money to quality assets.”
They said, “Given increasing concerns about US economic leadership and policy uncertainty, gold would benefit from lower interest rates and a weaker dollar. In this context, central banks may further accelerate the diversification of their foreign exchange reserves away from the dollar.”
In this bullish scenario, the World Gold Council anticipates “a strong performance for gold, perhaps rising another 10%-15% in the second half of the year, closing the year up nearly 40%.”
The analysts added, “As we have seen historically during periods of heightened risk, investment demand will significantly outstrip a slowdown in consumer demand and an increase in recycling. Even though inflows into gold-backed ETFs have been substantial already in H1, total holdings of 3,616 tonnes remain well below the 2020 peak of 3,925 tonnes. Moreover, gold-backed ETFs accumulated less than 400t in the past six months and just over 500t in the past twelve months. By comparison, gold-backed ETFs accumulated 700t to 1,100t during prior rallies.”
Analysts also point out that net long positions in COMEX futures currently stand at around 600 tonnes, while they rose to over 1,200 tonnes during prior crises. “All of which suggests there is significant scope for further accumulation if things deteriorate.”
For a bearish scenario, the World Gold Council points to “A sustained resolution of geopolitical and geo-economic conflicts, reducing the need to hold hedging instruments such as gold as part of an investment strategy – encouraging investors to take on more risk.”
However, analysts point out that “A complete resolution of risks seems unlikely given what we have seen over the past six months. But a more encouraging economic outlook, even with persistent inflationary pressures, would push US Treasury yields higher, leading to a steepening of the yield curve. If inflation stabilises further, the impact on interest rates would be more pronounced.”
The World Gold Council says that the impact of a bearish scenario could see gold give back 50% or more of its annual gains.
“In this scenario, our analysis suggests that gold may retreat by 12%-17% in H2, ending the year with a positive but lower double-digit (or even single-digit) return,” the analysts wrote. “This pullback would be equivalent to partly explaining away the trade risk premium that explains gold’s H1 performance. Reduced risks, coupled with increased opportunity cost through higher yields and a stronger dollar, would trigger outflows from gold-backed ETFs and reduced overall investment demand. We may also see a slowdown in central bank demand if US Treasuries regain favour.”
They added, “Technical analysis and speculative positioning in the gold market suggest that $3,000/oz will be a natural ‘support level’ which would prompt opportunistic investment buying. If gold falls below these levels, disinvestment may accelerate. That said, lower gold prices would attract more price-sensitive consumers, limiting gold’s downside more than simply looking at real interest rates and the dollar might suggest.”
The World Gold Council concludes by pointing out that the “unusually strong” first half of the year for the yellow metal was built on a foundation of “a weaker dollar, persistent geopolitical risks, robust investor demand, and continued central bank buying.” While some of these drivers may persist into the second half of the year, “the path forward remains highly contingent on a variety of factors, including trade tensions, inflation dynamics, and monetary policy.”
The analysts say, “Prevailing expectations suggest that gold will end the year on a relatively stable trajectory with modest upside potential if macro conditions remain unchanged. Gold may also get some support if new institutional investors such as Chinese insurance companies join in. A more turbulent geo-political and geo-economic scenario could push gold much higher, particularly if a more substantive stagflation or recession risk emerges and investors’ appetite for safe-haven assets grows.”
On the other hand, though it seems unlikely in the current environment, a widespread and sustained normalisation of global trade, bringing higher yields and a recovery in risk appetite, would challenge gold’s momentum. Gold may also be tested by a pronounced slowdown in central bank demand that exceeds current expectations.
Overall, the World Gold Council says that through the fundamentals, they “believe gold remains well-positioned in the current macro landscape to support tactical and strategic investment decisions.”
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