Gold has outshone nearly every asset class in the first half of 2025, climbing 26% and setting 26 all-time highs, underlining its role as the go-to hedge, according to The World Gold Council’s ( WGC ) Gold Mid-Year Outlook 2025.

This was driven primarily by a weaker US dollar, persistent geopolitical risks, robust investor demand, and continued central bank purchases, against a backdrop of economic recalibrations.

Beyond US-China tensions, the report notes that ongoing instability in the Middle East and the prolonged conflict between Russia and Ukraine have further reinforced gold’s appeal as a safe-haven asset.

These pressures, alongside record trading volumes and strong institutional flows, have helped sustain gold’s momentum across Western and Asian markets, underscoring its global role amid rising macro and geopolitical uncertainty. Average daily gold trading volumes hit a record US$329 billion in H1.

Central bank purchases, though moderating from 2022 peaks, remain robust while ETF holdings jumped 41% to US$383 billion, reflecting investor urgency for defensive positioning amid uncertain economic signals.

Three paths

Looking ahead to the second half of 2025, the outlook outlines three possible scenarios for gold’s trajectory. Under the base case, where inflation edges above 5% and central banks, including the US Federal Reserve, begin cautiously lowering rates ( with a 50bp cut expected by year-end ), gold is projected to remain broadly rangebound, potentially ending the year 0% to 5% higher from current levels.

In a more bullish scenario, however, if stagflation deepens or recessionary pressures mount, gold could surge an additional 10% to 15%, bringing total 2025 gains close to 40%. This would reflect a pronounced flight to safety as investors respond to worsening economic conditions and increased policy uncertainty.

Conversely, in a more optimistic environment where geopolitical tensions ease and economic growth picks up meaningfully, gold could face headwinds. Improved risk appetite and rising yields might prompt investors to rotate out of defensive assets, potentially trimming 12% to 17% off gold’s first-half gains and pushing prices below the US$3,000/oz mark, the WGC says.

Asia’s ascent

Asia continues to play a pivotal role in shaping global gold flows. China and India both saw strong local currency returns in H1, 23.8% in renminbi and 26% in rupee, reflecting vibrant retail and institutional demand.

The WGC also highlights a growing presence of Chinese insurers in the gold market, with new capital entering both global and domestic gold-linked investments.

Central banks across Asia, meanwhile, have maintained a steady pace of diversification away from US dollar assets, reinforcing the region’s long-term appetite for gold. This structural demand is supported by cultural factors, rising affluence, and strategic positioning amid global uncertainty, particularly in Southeast Asia.

Meanwhile, ETF inflows surged across key Asian financial hubs, with exchanges in Tokyo, Shanghai, and Mumbai recording new highs in gold-linked investment products, underscoring the depth and breadth of regional engagement.

While gold’s outlook for the remainder of 2025 is shaped by a complex mix of economic and geopolitical crosscurrents, the WGC sees Asia remaining firmly at the centre of asset movements.

As investors across the region increase their allocations and central banks hold course, gold’s foundation appears to be resilient, particularly if global instability lingers deep into the year’s second half.