According to the World Gold Council’s mid-year outlook, gold jumped 26% in U.S. dollar terms during the first half of 2025. It reached 26 new all-time highs in that period, driven by a trifecta of macroeconomic conditions :
- A weak U.S. dollar, which reduces opportunity cost.
- Geopolitical tensions and economic uncertainty boosting safe-haven demand.
- Range-bound interest rates, minimizing returns on bonds and equities .
Gold Compared to Other Asset Classes
In India, gold delivered a 26% return in rupee terms, topping all asset classes for the period. Global gold exchange-traded funds saw their largest half-year inflow since 2020, with $38 billion added (397 tonnes), indicating record investor accumulation
Key Drivers Behind the Surge
- Geopolitical risks: Conflicts like Israel–Iran boosted safe-haven demand
- Monetary policy backdrop: Low and stable interest rates reduced opportunity costs for holding gold .
- Central bank buying: Ongoing purchases from public sector funds maintained strong baseline demand
Outlook for H2 2025
- Base case: A continued but moderate upward trend, potentially gaining around 0–5% if current conditions persist
- Bull case: A deteriorating geopolitical or economic environment could boost gold by 10–15% more
- Bear case: Stabilization or resolution of tensions might see gold retreat up to 12–17% from current levels
What This Means for Investors
- Safe haven appeal: With uncertainties around trade, inflation, and politics, gold remains a defensive cornerstone.
- Diversification boost: ETF inflows and central bank purchases highlight sustained investment appetite.
- Watch macro trends: Dollar strength, rate shifts, or geopolitical calm could reshape price action in the second half.
✅ Conclusion
Gold’s striking 26% rally in H1 2025 reflects its enduring value as a safe-haven asset amid currency weakness, uncertain geopolitics, and economic fragility. As it continues to outperform, the second half of the year will test whether strength is sustained, moderated, or corrected based on global developments.
