Golden Momentum or Market Pause? Navigating H2 2025

Gold surged 26% in USD terms in H1 2025, recording its strongest first-half performance in nine years amid persistent geopolitical tensions, a weaker dollar, and steady investor demand. While June’s price action was subdued with the LBMA Gold Price up just 0.3% the overall trajectory remains bullish. Gold’s resilience is being driven by macroeconomic uncertainty, continued central bank accumulation, and robust ETF inflows, especially in China. 

China played a major role in global gold dynamics. The People’s Bank of China (PBoC) increased its gold reserves for the eighth consecutive month, bringing H1 purchases to 19 tonnes and total official holdings to 2,299t. Gold now accounts for 6.7% of China’s FX reserves, up from 5.5% at end 2024. Meanwhile, Chinese gold ETFs experienced record-breaking inflows, with RMB64bn (~US$8.8bn) added in H1, propelling total AUM to RMB153bn and holdings to 200t. 

Despite investment strength, consumer demand remains soft. Gold withdrawals from the Shanghai Gold Exchange dropped 18% y/y in H1, reflecting weak wholesale demand and subdued jewellery sales due to high prices and tepid consumer confidence. Imports followed suit, falling 21% m/m and 31% y/y in May. 

Looking ahead, gold’s outlook depends on the macro environment. If current conditions persist, gold may move sideways or post modest gains (0–5%). However, should financial instability or stagflation intensify, safe-haven demand could propel prices 10–15% higher. Conversely, a sustained easing in geopolitical tensions could pressure gold, leading to a potential 12–17% correction.