Gold has emerged as the top-performing asset class in the first half of the year, with spot prices rising 25%. This marks an 80% cumulative increase since 2023, showcasing a remarkable bull run.
Key Performance Highlights
- 2025 YTD Performance: +25% (opening at $2,623/oz, peaking at $3,499/oz in April)
- 2024 Performance: +27.3% (closing at $2,624/oz)
- 2023 Performance: +13.12% (breaking $2,000/oz barrier)
👉 Why central banks are stockpiling gold
Drivers of the Gold Rally
- Geopolitical Tensions: Escalating conflicts and trade wars (e.g., Trump-era tariffs) accelerated safe-haven demand.
- Central Bank Buying: Global reserves now allocate 20% to gold, surpassing the euro's 16% share.
Institutional Forecasts:
- Morgan Stanley: Predicts $6,000/oz by 2029 (+80% from current levels)
- Goldman Sachs: $3,700/oz by end-2025, $4,000/oz by mid-2026
- Citi: More cautious, expecting pullback to $2,500–$2,700/oz range by 2026
Market Dynamics
Supply-Demand Imbalance
- Investor Migration: A mere 0.5% shift from $54T US assets to gold would require 2,500 tons—exceeding annual mining output (3,600 tons).
- De-Dollarization: Central banks' dollar reserves fell to 57.4% in 2024 (lowest since 1995), while gold reserves rose to 18.3%.
Technical Breakthroughs
- Price Acceleration: From $1,000 to $2,000 took 12 years; $2,000 to $3,000 only 5 years; next $1,000 gain projected in 2–3 years.
Banking Sector Adjustments
Major banks have raised gold investment thresholds due to soaring prices:
| Bank | Previous Minimum | New Minimum | Increase |
|---|---|---|---|
| China Everbright | ¥700/g | ¥1,000/g | +43% |
| China Merchants | ¥800/g | ¥1,000/g | +25% |
| China Construction | ¥800/g | ¥1,000/g | +25% |
👉 How to invest in gold during market volatility
Central Bank Gold Strategy
- Top Buyers (2024): China, India, Turkey, Poland
- China's Reserves: 7.383M oz (7 consecutive months of growth)
- 2025 Outlook: 43% of central banks plan to increase gold holdings
FAQs
Q: Why is gold outperforming other assets?
A: Combination of geopolitical risks, inflation hedging, and strong central bank demand.
Q: Is now a good time to invest in gold?
A: While prices are high, long-term drivers (de-dollarization, supply constraints) remain intact.
Q: What’s the biggest risk to gold prices?
A: Sudden resolution of geopolitical conflicts or a stronger-than-expected USD rebound.
Q: How are retail investors accessing gold?
A: Through ETFs, physical bars, or bank-offered gold accumulation plans (despite higher entry points).
Note: All price data reflects spot gold (XAU) in USD/oz.
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