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Investor demand for gold has risen amid heightened economic uncertainty and a weaker US dollar, bolstering its price 25% to US$3,300 per ounce in the first five months of 2025, a new report finds.
“Whether a lingering global inflation impulse, trade war, US retrenchment, government debt loads, or vox populi political movements, demand for gold as a low volatility, portfolio diversifying, perceived safe-haven asset, should continue, especially as the probability distribution of policy, geopolitical, and macroeconomic outcomes widens,” State Street Global Advisors ( SSGA ) says in its midyear outlook for the precious metal.
The investment management firm remains bullish over the medium term due to a combination of tactical and structural factors. For tactical factors, it cites the uncertain trade policy, exchange-traded fund ( ETF ) flows, recession risks, and potential Federal Reserve easing. Structurally, gold will gain from strong central bank demand, sovereign debt burdens, and the de-dollarization trend.
According to SSGA, the gold market has transitioned to a higher price regime north of US$3,000/oz for the rest of 2025, but prices could test US$4,000 to US$5,000 over the next 12-24 months.
The return of financial inflows, particularly from Western gold ETF investors, represents the largest potential annual growth in gold demand for 2025.
“Fluid trade policy may be a factor driving those flows; investors don’t know the timing or ultimate end game of tariffs, which stokes volatility. We don’t pretend to have a definitive answer either, but we do think it’s likely that the [US President Donald] Trump administration’s geoeconomic policy could benefit gold, as governments and investors question US financial, economic, and currency dominance,” the report says.
State Street Global Advisors identifies five themes that it expects to support a bullish gold price environment: gold ETF inflows have potential to increase; China’s gold consumers rebound; official sector’s gold demand is likely to stay strong; alternative-fiat demand and global debt will support higher prices; and the Fed is still poised to cut rates.
In Asia-Pacific, physical gold ownership has grown strongly over the past five years, helping underpin a higher gold price regime. Robust gold investment demand, led by China, India, and Japan, has been supported by economic uncertainty, geopolitical instability, local currency depreciation, and the underperformance of risk assets relative to gold. Last year, the region’s share of world gold bar/coin demand rebounded to 65%, a full recovery from the 2020 consumer recession and 2 percentage points above the 2010-2019 mean, according to the report.
Still, gold can soften to US$2,700 to U$3,100 per ounce, the Boston, Massachusetts-based firm says. It cites several scenarios for this to happen: Sino-US tensions de-escalate and a semi-permanent resolution is reached, leading to a return to the greenback and US growth exceptionalism; volatility compresses across asset markets; Fed rates stay on hold as organic growth rebounds; and China, central bank, and gold ETF demand turns softer than expected.
