Is Gold Still Shining?

Shifting macroeconomic conditions and easing geopolitical tensions are reshaping market sentiment and clouding gold’s near-term outlook. After hitting record highs earlier this year, gold prices have begun to retreat, prompting a fresh question for investors: Has the metal’s rally run its course, or is this merely a pause before the next surge?

Below are eight key questions I address about the current state of the gold market.

Of course, the drivers of gold prices are fluid, and the following commentary is based on information available as of July 11, 2025.

Was the recent high in gold a short-term peak?

Gold has been one of the top performing assets in 2025, rising 25% year-to-date (as of early July 2025) amid strong demand from investors and central banks.

Prices peaked in late April, driven by tariffs, high uncertainty, and market volatility. Another high occurred in early May, which was influenced in part by a weaker U.S. dollar, and a mid-June rise was largely fueled by geopolitical risks.

But since the April peak, gold has been trading mostly sideways within a wide and volatile range of $3,200 to $3,400 per ounce, losing a bit of momentum as of late. The metal appears to be supported in the medium term, given trade policy and economic uncertainty, the impact of tariffs to the U.S. and world economies, and continuing central bank purchases.

However, with the absence of a major geopolitical event that would typically drive investor demand higher, as well as slowing jewelry and coin purchases, we believe the strong upward momentum appears to have run its course.

What drove gold’s decline from its April 2025 peak of approximately $3,500?

In April, U.S.-China tensions escalated sharply, and as a result, tariffs were significantly increased on both sides of the Pacific. We saw increased volatility in the markets, a condition in which gold typically thrives. Investor demand increased substantially as a result.

But since then, conditions have begun to improve. The May 12 joint statement regarding a tariff truce between the United States and China signaled progress, and tariffs have moderated. Meanwhile, cross-border hostilities between Iran and Israel seem to have eased with those countries’ mutually agreed upon truce, at least in the short term. 

At the same time, we believe there are signs of softening jewelry and coin demand, largely due to high prices and volatility. In India, which is a key market for gold, consumer purchases seemed to be a bit slow during key festive events. While the total value of purchases remains high, this seems driven more by elevated prices than by quantity.

Gold has been one of the top performing assets in 2025.

Is this a temporary correction or a trend reversal?

Despite heightened regional instability due to the Iran-Israel conflict, gold prices have failed to surpass their April highs.

We believe central bank gold purchases gold buying was lower in the first quarter of 2025, both sequentially and on a year-over-year basis, suggesting that even though dollar diversification as a trend is likely to continue, high gold prices might disincentivize part of the demand from central banks.

Investor positioning in exchange-traded funds (ETFs) have increased sharply this year, but the trend is not mirrored in futures. While there are enough catalysts to support gold prices at current levels, a sustaining rally from here might prove more challenging.

Is gold headed to $4,000—or falling back to $2,800?

We are seeing a wide range in gold price forecasts, from bullish $4,000 targets to bearish calls near $2,400 for 2026, which reflects underlying market uncertainty.

To better understand momentum, we believe demand should be viewed across three segments: central banks, institutional investors, and physical demand for coin and jewelry.

Since 2022, central banks have structurally increased gold holdings to help diversify away from the U.S. dollar; many emerging market (EM) central banks still have room to expand allocations to gold. In contrast, elevated prices have begun to curb physical demand in gold.

Investor demand has been very strong so far this year amid economic and geopolitical risks due to gold’s perception as a safe haven. In our view, a strong upward momentum in gold from current levels would require investors to further increase their allocations—something we believe may be challenging.

And, as always in periods of high commodity prices, supply and recycling are incentivized, which could limit the rally’s upside potential.

What would need to happen for gold to surpass its recent peak?

A combination of weaker growth because of tariffs and an uptick in inflation could put the U.S. Federal Reserve (Fed) in wait-and-see mode, making the U.S. dollar less attractive. This could be in favor of gold prices, as we believe gold remains a reliable hedge against uncertainty, recession, and stagflation risks.

In addition, meaningful escalation in geopolitical conflicts or trade wars could be positive catalysts for a gold rally.

We believe central bank gold purchases are also likely to continue, driven by dollar diversification due to persistent deficits and policy uncertainty in the United States.

Meaningful escalation in geopolitical conflicts or trade wars could be positive catalysts for a gold rally.

On the other hand, what would need to happen for gold to pull back even further?

We’re seeing signs that investors are trimming their gold exposure. Futures positioning has come down, and ETF holdings have started to taper off.

If sentiment continues to improve and tariffs end up being less damaging to growth, we believe investors may rotate back into risk assets, which could weigh on gold prices.

We’ve also seen signs of weaker physical demand in key markets, such as India, as retail investors and consumers delay or reduce purchases on the back of high prices and volatility.

Given market volatility, how reliable are gold price forecasts?

So far in 2025, gold price forecasts have been changed four to five times in most major forecasting institutions, which is far more frequently than the usual quarterly or semiannual updates.

This underscores how volatile and unpredictable the current environment is, making it especially difficult to rely solely on forecasts for investment decisions.

Instead, we focus on fundamentals such as quarterly central bank purchases, gold reserves in central bank balance sheets, futures and ETF positioning, and gold’s correlation with the U.S. dollar. We also closely track economic and trade news to gauge sentiment and momentum.

What should EM debt investors consider now?

About 80% of mined gold comes from EM countries, providing plenty of investment opportunities for investors in EMs.

Our approach to investing in gold companies in EMs involves thorough research analysis on the company’s operations and financials as well as the gold market as a whole.

We also stress test gold miners’ resilience across different price scenarios, focusing on companies that invest in reserve growth and expansion while managing downside risks. We believe the current environment presents good hedging opportunities for disciplined producers.

Alexandra Symeonidi, CFA, is a senior corporate credit and sustainability analyst on William Blair’s emerging markets debt team.