Gold anticipated to maintain a restricted range in the second half of 2025, according to WGC assessment
The World Gold Council (WGC) has projected a favourable outlook for gold prices in the second half of 2025, with the precious metal expected to remain strong or even strengthen further. This optimistic forecast is primarily driven by several key factors, including a weaker U.S. dollar, ongoing geopolitical tensions, robust central bank demand, and sustained investment interest amid a highly uncertain global economic environment.
In the first half of the year, gold experienced a strong surge, rising by 26% in U.S. dollar terms. This growth was supported by the weakest performance of the U.S. dollar since 1973, stable interest rates, and increased geoeconomic uncertainty, making gold one of the top-performing major asset classes. The momentum is expected to continue, underpinning gold's strength in the second half of 2025.
However, the WGC also acknowledges potential volatility triggered by trade policy developments, particularly U.S. tariff decisions that could influence market dynamics. Despite this risk, the ongoing geopolitical conflicts and economic policy uncertainties are likely to sustain demand for gold as a safe-haven asset.
The WGC suggests that gold may move sideways with some possible upside, increasing an additional 0-5% in the second half of 2025. If economic and financial conditions deteriorate, exacerbating stagflationary pressures and geoeconomic tensions, haven demand for gold could significantly increase, potentially pushing gold 10-15% higher from current prices.
On the flip side, widespread and sustained global trade normalization could bring higher yields and resurgent risk appetite, challenging gold's momentum. A more volatile geopolitical and geoeconomic scenario could push gold significantly higher, particularly if more substantial stagflation or recession risks materialize and investor appetite for safe-haven assets grows.
Central bank demand for gold is likely to remain robust in 2025, moderating from its previous records but staying well above the pre-2022 average of 500-600 tonnes. The analysis by the WGC is based on their Gold Valuation Framework and macro-predictions of economists and market participants.
The WGC's mid-year 2025 report also highlights the potential role of new institutional investors, such as Chinese insurance companies, in supporting gold prices. Technical indicators suggest that the consolidation phase of gold over the past few months is a healthy pause in a broader uptrend.
As the second half of 2025 approaches, gold enters the period having risen 26% for the year. Central banks are expected to begin cautiously lowering interest rates towards the end of Q4, with the Fed expected to cut rates by 50 basis points by the end of the year. World inflation is likely to rise above 5% in the second half of 2025, with the market expecting US CPI to reach 2.9%. The global GDP is expected to move sideways and remain below trend in the second half of 2025.
In conclusion, the WGC's forecast positions gold as a resilient asset amid continued global economic and geopolitical uncertainty throughout the latter half of 2025. Gold could be partly supported by contributions from new institutional investors, such as Chinese insurance companies, and is expected to move sideways with some possible upside, increasing an additional 0-5% in the second half of 2025. However, a more volatile geopolitical and geoeconomic scenario could push gold significantly higher, particularly if more substantial stagflation or recession risks materialize and investor appetite for safe-haven assets grows.
- The World Gold Council's (WGC) analysis suggest that gold may move sideways with some possible upside, increasing an additional 0-5% in the second half of 2025.
- The WGC's mid-year 2025 report also highlights the potential role of new institutional investors, such as Chinese insurance companies, in supporting gold prices.
- Central bank demand for gold is likely to remain robust in 2025, moderating from its previous records but staying well above the pre-2022 average of 500-600 tonnes.
- The ongoing geopolitical conflicts and economic policy uncertainties are likely to sustain demand for gold as a safe-haven asset.
- A more volatile geopolitical and geoeconomic scenario could push gold significantly higher, particularly if more substantial stagflation or recession risks materialize and investor appetite for safe-haven assets grows.
