Gold outlook: downhill or second wind?

The World Gold Council has released its Gold Mid-Year Outlook, as the metal continues its record-setting pace, rising 26% in US dollar terms in H1 CY25.

A combination of a weaker US dollar, rangebound rates and a highly uncertain geoeconomic environment has driven this strong investment demand.

The paper examines the base, bull and bear cases for gold in H2 CY25.

The World Gold Council forecasts that under current consensus expectations for continued normalisation gold could remain rangebound in H2, closing roughly 0%–5% higher than current levels, still equivalent to a 25%–30% annual return

Should economic and/or financial conditions deteriorate further, under the bull case, exacerbating stagflationary pressures and geoeconomic tensions, increased safe-haven demand could push gold 10%-15% higher.

Under a bear case, widespread and sustained conflict resolution could see possible 12%-17% pullback from YTD gains.

“As we look forward, one of the questions investors continue to ask is whether gold has reached a peak or has enough fuel to push higher,” the World Gold Council said in its outlook.

“Using our Gold Valuation Framework, we analyse what current market expectations imply for gold’s performance in H2 CY25, as well as the drivers that could push gold higher or lower, respectively.

“Trade-related and other geopolitical risks played a large role, not just directly, but by fuelling moves in the dollar, interest rates and broader market volatility — all of which fed into gold’s appeal as a safe-haven.

“Taken together, these factors have contributed around 16% to gold’s return over the past six months, according to our Gold Return Attribution Model.”

The World Gold Council outlines four key drivers that determine how the market will fare in H2 CY25: economic expansion, risk and uncertainty, opportunity cost, and momentum.

“The second half of the year sits on a seesaw, with geoeconomic uncertainty keeping investors on edge,” the World Gold Council said.

“Inflation data have shown signs of improvement, but concerns remain that conditions could deteriorate quickly.

“Dollar-related pressures are likely to persist, and questions around the end of US exceptionalism may dominate investor discussions.

“Overall, these conditions position gold as a net beneficiary — but while the fundamentals remain strong, the gold price has already captured part of these dynamics.

“In turn, sustainable conflict resolution and continued rising stock prices could lure more risk-on flows and limit gold’s appeal.”

In all, given the intrinsic limitations of forecasting the global economy, the World Gold Council believes that gold — through its fundamentals — remains well positioned to support tactical and strategic investment decisions in the current macro landscape.