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Gold prices have been on an unstoppable rally in 2025, with 20 days of record highs so far. The first quarter of 2025 saw gold gaining 18.5%, making it the best quarterly performance since 1986.
This historic surge has been driven by several factors.
Here are the top 10 reasons why gold had its best quarter in nearly four decades:
Central bank buying at record levels
Global central banks have been major buyers of gold, purchasing over 1,000 tons in the past three years.
This sustained demand has significantly supported gold prices.
Economic uncertainty and tariffs
Fears of a global economic slowdown, exacerbated by ongoing tariff wars, have led investors to seek safe-haven assets like gold.
Expectations of interest rate cuts
With the US Federal Reserve and other central banks signaling further monetary easing in 2025, lower interest rates have boosted the appeal of non-yielding assets like gold.
Geopolitical tensions and conflicts
Military conflicts and escalating geopolitical tensions worldwide have fueled demand for gold as a hedge against uncertainty.
Declining US dollar index
The dollar index dropped 4.5% in the January-March quarter, making gold cheaper and more attractive for investors holding other currencies.
Strong investment demand
Gold ETFs and sovereign gold bonds have seen significant inflows, reflecting strong investment interest globally.
Stock market volatility
Heightened volatility in equity markets has led investors to shift towards gold as a stable alternative investment.
Rising global debt levels
Mounting government debt, particularly in major economies like the US, has driven concerns about financial stability, further supporting gold prices.
China’s insurance industry enters gold market
Four of China’s top 10 insurance companies have approved gold as an investment asset, potentially leading to billions in fresh inflows.
A 1% allocation from these firms’ combined assets of ¥13 trillion could translate into 183 tons of gold purchases.
Strong demand in the US and Comex holdings at all-time high
US investors have been aggressively buying gold, with Comex holdings reaching all-time high levels, further driving up prices.
Where is gold headed?
Gold's bullish momentum is expected to continue until economic uncertainties, including trade disputes and geopolitical tensions, subside.
Leading financial institutions have raised their price targets:
Goldman Sachs: $3,300 per ounce by end-2025, $4,500 per ounce in an extreme scenario
Citi: $3,200 - $3,500 per ounce
Bank of America: $3,350 per ounce
ANZ: $3,200 per ounce
Macquarie: $3,500 per ounce
UBS: $3,200 per ounce
deVere Group: $3,300 per ounce
However, analysts caution that once these uncertainties stabilise, gold prices could experience a sharp correction, potentially dropping to $2,850-$2,700 per ounce.
